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Piece of capital equipment

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Reference no: EM131428056

A firm has a production function of Q = L1/3K 2/3

  • If wages are $13, the price of the final product is $39 and Capital is  27, how many employees will the firm employ? 
  • If a piece of capital equipment is infinitely lived (with proper operational maintenance), How many pieces of capital would the firm employ (at a machine cost of $100 and an interest rate of 24.75%), given the production function offered and the employment level arrived at in question #6A (do not use the Capital number from A)?  Please show your work. 
  • Choose two examples and explain the management and profitability impacts of these two issues
    • Rise in interest rates.  How do you use your issues of marginal product to address this increase in interest expense? 
    • Rise in wages.  How do you use your issues of marginal product to address this increase in wage expense?

Reference no: EM131428056

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