A andatuur of toys is employing 50 workers and using 15 piec

A andatuur of toys is employing 50 workers and using 15 pieces of equ ment to assemble to s. Cuenty the margral product of labor $15 and the mar nal product of capital is $15. Assume the market prices for labor and capital are $12 and $20, respectively Is this firm maximizing its profit? No What should this frm do with respect to its employees and ts use of equipment? The frm should the number of employees and its use of equipment

Solution

Ans

No

Increase employment of labour since wage<mpl and decrease capital since wage>marginal product of capital