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A firm’s production process requires two factors, labor and capital. The following table illustrates the marginal productivity and cost of each factor at the current level of production.If MP is the marginal product, which of the following best describes the firm’s optimal decision? A:Simultaneously increase the use of both factors until the MP is maximized. B:Initially increase the use of capital until its MP/unit cost equals the MP/unit cost of labor. C:Initially increase the use of labor until its MP/unit cost equals the MP/unit cost of capital. |
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