4/27/2023 0 Comments Marginal product formula![]() ![]() Advantages of Marginal Product of Capital Marginal Product of Capital (MPK) = 50,000 / 50,000 = 1īy this, we can conclude that with the increase in the additional capital of $50,000, the company can increase the 50,000 units of its production, and its marginal product of capital is 1. Now, the marginal product of the capital of the company will be calculated as follows: So, the change in the company’s capital comes to $50,000. So, the total change in output produced by the company comes to 50,000 units (150,000 – 100,000).Īlso, this increase is possible only after introducing additional capital of $50,000 to purchase the new machinery. In the present scenario, the production of the units per month by the company increased from the level of 100,000 to 150,000. Next, calculate the marginal product of the capital. This purchase of new machinery leads to an increase in the output produced by the company, and the company is now able to produce 150,000 units per month. Now the management wants to increase the production of the output in the company because of the expectation of the demand increase.Īfter a few days, the company’s management purchased new machinery for $ 50,000. The company is currently operating at its full capacity and manufacturing 100,000 units per month. ![]() In recent months, the company gained huge popularity in the market. ![]() manufactures and sells garments in the market. ![]()
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