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Describe how the firm should adjust employment of labor

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Reference no: EM133203126

Chips-R-Us employs labor and rents robotic technology for its production process of circuits.  The robotic technology can handle some of the human tasks and vice versa. Suppose that at the current input usage levels, the marginal product of labor is 40 shipments of circuits per day and the marginal product of robots is 100 shipments of circuits per day. The daily wages & benefits per worker are $80 and the daily rental rate per robot is $500.

  1. Explain why the firm is currently NOT minimizing the cost of producing its current daily output - in other words, why it is NOT using an optimal mix of labor and automation.
  2. Describe how the firm should adjust employment of labor and robots to reduce the total cost of producing its current level of integrated circuits.

Reference no: EM133203126

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