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Decrease the amount of capital

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A manager hires labor and rents capital equipment in a very competitive market. Currently, the wage rate is $10/hour and capital rental price is $5/hour. If the marginal product of labor is 50 units of output per hour and the marginal product of capital is 40 units of output per hour, is the firm using the cost-minimizing combination of labor and capital? If not, should the firm increase or decrease the amount of capital (labor) used in its production process?

Reference no: EM132256818

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