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Marginal product of capital

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Reference no: EM132298696

1. Suppose a firm finds that the marginal product of capital is 60 and the marginal product of labor is 20. If the price of capital is $6 and the price of labor is $2.50, describe how the firm should adjust its mix of capital and labor? What will be the result?

2. Please explain why the law of diminishing returns applies only in the short-term period.

Reference no: EM132298696

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