Question 11 A firm is using both labor and capital to produce. The current price of capital is $10/hr and the current price of labor is $30/hr. If currently each machine is producing 100 units per hours and each human is producing 300 units per hour, what should this firm do to increase efficiency? a. use more machines and less labor b. use less machines and more labor c. use less machines and less labor d. use more machines and more labor e. nothing - this firm is operating efficiently
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This means that the productivity of labor is higher than the productivity of capital. To increase efficiency, the firm should aim to allocate resources in a way that maximizes productivity. Since the price of labor is higher than the price of capital, it would Show more…
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