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Consider the following information in the table for Pat’s Pizza Restaurant and answer the questions below. Marginal Product of Capital 4,000 Marginal Produce of Labor 100 Wage Rate $10 Rental Price of...

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Consider the following information in the table for Pat’s Pizza Restaurant and answer the questions below.

Marginal Product of Capital

4,000

Marginal Produce of Labor

100

Wage Rate

$10

Rental Price of Pizza Ovens

$500

a.Is the owner of Pat’s Pizza Restaurant minimizing cost?

b.Should he rent more ovens and hire fewer workers or rent fewer ovens and hire more workers? Explain.

Answered Same Day Dec 31, 2021

Solution

David answered on Dec 31 2021
118 Votes
Consider the following information in the table for Pat’s Pizza Restaurant and answer the questions below.
Marginal Product of Capital 4,000
Marginal Produce of Labor100
Wage Rate $10
Rental Price of Pizza Ovens 500
a. Is the owner of Pat’s Pizza Restaurant minimizing cost?
. Should he rent more ovens and hire fewer workers or rent fewer...
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