posted by Razu on .
the largo publishing house use 400 printers and 200 printers presses to produce book. a printers wage rate is 20 and the price of a printing press is 5000. the last printer added 20 books to total output. is the publishing house making the optimal in put choice? why or why not? if not how should the manager of largo publishing house adjust input usage?
The last printer adds 20 books to the total output. So, the marginal productivity of the last printer is 20 books. The marginal productivity of the last printing press is 1000 books. The optimal choice of input is determined by the condition,
Marginal productivity of printer Marginal productivity of printing press Wage rate of the printer Price of the printing press 20 /20 ‚ 1000 / 5000 1 ‚ 0.2