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.
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