If the cost of using an additional unit of capital equipment is $1,500 and the marginal product of a unit of capital is 7,500 units of output, this means that for each additional dollar spent on capital, there is a gain of __________ units of output.

Question

Quizplus · Accepted Answer

To find the gain in units of output per additional dollar spent on capital, we need to calculate the marginal product of capital per dollar spent, which is equal to 7,500 divided by 1,500, or 5. Therefore, for each additional dollar spent on capital, there is a gain of 5 units of output.

If the Cost of Using an Additional Unit of Capital