Question

You know that the rental price of capital is $3,000, the rental price of land is $2,000, and the wage of labor is $100. The value of the marginal product produced by each factor is $30,000, $4,000, and $200, respectively. You would advise the company to hire more

A. labor.
B. land.
C. capital.
D. less labor and more land.
E. less capital and more labor.

Answer 1

The correct answer is C. capital.

Step-by-step explanation:

To begin with, capital income is that profit that is generated by a good or something related that it can produce by itself. By hiring capital, more income of this type would be generated and therefore the profit would be greater, on the other hand, if rent is contracted, it is probable that the invested value is not recoverable over time since this would be considered an expense and therefore there would be no income . In the case of personnel, it would not be viable either because in a production environment it is necessary that they use capital goods to be able to produce, and if only people were hired there would be no way to generate income.