Suppose that the marginal product of the last worked employer by a firm is 40 units of output per day and the daily wage that the firm must pay is $20, while the marginal product of the last machine rented by the firm is 120 units of output per day and the daily rental price of the machine is $30.
- Why is the firm not maximizing output or minimizing costs in the long run?
- How can the firm maximize output or minimize costs?