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Assume a firm is currently employing 20 units of capital and 100 units of labour in its production process. Assume also that the marginal product of the 20th unit of capital is 40 units of output, the marginal product of the 100th unit of labour is 10 units of output and the per-unit prices of capital and labour are $20 and $10, respectively. In this case, to minimize its costs of production the firm should:

  1. hire more capital and less labour.
  2. hire more labour and less capital.
  3. hire less capital and less labour.
  4. hire more capital and more labour.

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Insha Fatima
Insha FatimaLv10
28 Sep 2019
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