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Gamma corporation one of the firms that retains you as a financial analyst is considering buying out Beta Corporation, a small manufacturing firm is now barely operating at a profit. You recommend the buyout because you believe that new management could substantially reduce production costs and thereby increase profit to a quite attractive level. You collect the following product information in order to convince the CEO at Gamma Corporation that Beta is indeed operating inefficiently:

MP l = 10

MP k = 15

P l = $20
P k =$15

Explain how these data provide evidence of inefficiency. How could the new manager of Beta Corporation improve efficiency?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9293138

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