Consider a small landscaping company run by mr. viemeister. he is considering increasing his firm’s capacity. if he adds one more worker, the firm’s total monthly revenue will increase from $50,000 to $58,000. if he adds one more tractor, monthly revenue will increase from $50,000 to $62,000. each additional worker costs $4,000 per month, while an additional tractor would also cost $4,000 per month.
a. what is the marginal product of labor? the marginal product of capital?
mpl = $¬
mpk = $¬
b. what is the ratio of the marginal product of labor to the price of labor (mpl / pl )?
mpl / pl = ¬
what is the ratio of the marginal product of capital to the price of capital (mpk/ pk )?
mpk / pk = ¬
c. is the firm using the least-costly combination of inputs?
choose:
1. yes, because mpk/pk = mpl/pl.
-or-
2. no, because mpk/pk > mpl/pl.
d. does adding an additional worker or adding an additional tractor yield a larger increase in total revenue for each dollar spent?
choose:
1. revenue is increased more by spending money on an additional worker.
-or-
2. revenue is increased more by spending money on an additional tractor.
Answers: 1
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Consider a small landscaping company run by mr. viemeister. he is considering increasing his firm’s...
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