Marginal product vs maximizing output
Kraft has a plant in the Alaska and Hawaii:
The wage in Alaska is $5.
The wage in the Hawaii is $20.
Marginal product of the last worker in Alaska is 100
Marginal product of the last worker in the Hawaii. is 500
(Size of the plants or the amount of capital equipment is
unchangeable).
a. Is the firm maximizing output relative to its labor cost?
Details.
b. If it is not, what should the firm do?
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