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Say a Firm That Sells Its Product at a Price

Question 4

Multiple Choice

Say a firm that sells its product at a price of $40 is using 20 units of capital. If the marginal product of the last unit of capital used was 50, and the constant rental rate of capital is $2,000, then this firm should


A) acquire more capital.
B) decrease the amount of capital.
C) continue to use same units of capital.
D) decrease its output.

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