l decreae firm uses both labor and capital to produce 25 units of output. The marginal product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being In the long run, assume employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of utput, what must be the unit price of capital?

Economics: Private and Public Choice (MindTap Course List)
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Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter25: The Supply Of And Demand For Productive Resources
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Will decrea
n he fong run, assume a firm uses both labor and capital to produce 25 units of output. The marginal
product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being
employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of
output, what must be the unit price of capital?
Transcribed Image Text:Will decrea n he fong run, assume a firm uses both labor and capital to produce 25 units of output. The marginal product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of output, what must be the unit price of capital?
Expert Solution
Step 1

The two inputs are used here, labor and capital. 

The marginal product of labor (MPL) = 100

The marginal product of capital (MPK) = 500

The wage rate of labor (w) = $10

we have to find out the unit price of capital (r).

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