Mary recently opened her own styling salon.After the first month of operation,she looks at the mix of inputs she is using to see whether she should make any changes.The value of marginal product of her stylists is $125,000,and their wage is $20.Her equipment and salon space produces a value of $250,000,and it costs $400 to rent it.The land,which she rents at $800,produces a value of $300,000.Should she change her input mix or is she maximizing profit with her current arrangement?

Question

Quizplus · Accepted Answer

The Answer of Mary recently opened her own styling salon.After the first month of operation,she looks at the mix of inputs she is using to see whether she should make any changes.The value of marginal product of her stylists is $125,000,and their wage is $20.Her equipment and salon space produces a value of $250,000,and it costs $400 to rent it.The land,which she rents at $800,produces a value of $300,000.Should she change her input mix or is she maximizing profit with her current arrangement?

Mary Recently Opened Her Own Styling Salon