Suppose That the XYZ Company Hires Labor and Capital in Competitive

question 38

Essay

Suppose that the XYZ Company hires labor and capital in competitive input markets.Assume that labor costs W = $200 per day and that a unit of capital costs C = $150 per day.At the current level of production,labor's marginal product is MPL = 40 units of output produced per day and capital's marginal product is MPK = 30 units of output per day.Given the information provided,is the firm minimizing the cost of current production? Explain why or why not.If the wage were to increase to $W ^ { \prime }$ = $240 per day,discuss and explain the long run adjustments that the firm would make in response to the wage increase.

---

Definitions:

Hepatic Portal Circulation

The system of blood vessels that carry blood from the gastrointestinal tract and spleen to the liver, facilitating nutrient processing.

Digestive

Pertains to the system in the body responsible for breaking down food into nutrients and waste.

Tunica Intima

The innermost layer of a blood vessel, composed of endothelial cells that line the interior surface of the vessel.

Endothelium

A thin layer of cells lining the interior surface of blood vessels and lymphatic vessels.