(Answered) Assume a firm has the production function q 25k 04 l05 if

Economics

Assume a firm has the production function Q = 2.5K 0.4 L0.5. If this firm employs 15 units of labor and 20 units of capital and the price of the good in the market is $100 per unit, find the following:

(a) Marginal product of labor and capital.

(b) Marginal revenue product of labor and capital.

Should the fact that in part (a) the marginal product of labor is larger than the marginal product of capital encourage this firm to substitute labor for capital?

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