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Example Problem #1 of Labor and Capital: We can use production functions to help us figure out the optimal amount of an input to use. Consider a cement company interested in hiring the optimal number of workers per day. Currently, it receives $15/ton for its cement (output price), and pays a typical worker $30/day (input price). Suppose it is currently employing 20 workers, and the marginal product of the 21st worker is 4 tons of cement. Should it hire the 21st worker?
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