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Producer Is Hiring 20 Units of Labor and 6 Units

Question 38

Multiple Choice

producer is hiring 20 units of labor and 6 units of capital (bundle A) .The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.In equilibrium,


A) MPL will be less than 20.
B) MPK will be more than 20.
C) MPL will be 5 times MPK.
D) a and b
E) none of the above

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