Suppose a firm finds itself in a situation where the marginal product of the last employee hired is 4 units per hour, and the marginal product of the last machine purchased is 10 units per hour. If the wage is $20/hour and the hourly rental rate of a machine is $50, what should this firm do if it wants to be as productive as possible? a. Lay off workers and use more machines. b. Hire workers and use less machines. c. Lay off workers and use less machines, d. Hire workers and use more machines. e. Nothing. This firm is already operating efficiently.
Suppose a firm finds itself in a situation where the marginal product of the last employee hired is 4 units per hour, and the marginal product of the last machine purchased is 10 units per hour. If the wage is $20/hour and the hourly rental rate of a machine is $50, what should this firm do if it wants to be as productive as possible? a. Lay off workers and use more machines. b. Hire workers and use less machines. c. Lay off workers and use less machines, d. Hire workers and use more machines. e. Nothing. This firm is already operating efficiently.
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 15P
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Suppose a firm finds itself in a situation where the marginal product of the last employee hired is 4 units per hour, and the marginal product of the last machine
purchased is 10 units per hour. If the wage is $20/hour and the hourly rental rate of a machine is $50, what should this firm do if it wants to be as productive as
possible?
a. Lay off workers and use more machines.
b. Hire workers and use less machines.
c. Lay off workers and use less machines,
d. Hire workers and use more machines.
e. Nothing. This firm is already operating efficiently.
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