If the cost of capital is $100 per hour, the wage paid to employees is $20 per hour, the marginal product of capital is 10 units per hour; and the marginal product of labor is 2 units per hour, the firm is minimizing costs.

Question

Quizplus · Accepted Answer

The firm is minimizing costs because the marginal product of capital per dollar spent on capital is equal to the marginal product of labor per dollar spent on labor.

If the Cost of Capital Is $100 Per Hour, the Wage