Question

1) How does capital investment affect the marginal physical product of labor? Does more college education have the same kind of effect? Which is a better investment? Please explain your answers in detail.

(2) While explaining your answer in detail, if you wish, you can also include an example. According to the rule for optimal input usage, a firm should hire a person as long as her marginal revenue product is greater than her marginal cost to the company. It is well known that many companies have management training programs in which new trainees are paid relatively high starting salaries and are not expected to make substantial contributions to the company until after the program is over (programs may run between 6 to 18 months). In offering such training programs, is a company violating the optimality rule? Explain.

Answer 1

Answer:-

1) Capital investment should build the marginal physical product of labor by keeping up the other components unaltered. On the off chance that congestion is by all accounts an issue at the work environment, we can lessen this swarming by spreading labor out for additional machines and furthermore for more territory in the work place assists with diminishing this floating.This thus causes us to build the productivity also.

The productivity of the current labor power will be improved with a few factors, for example, new developments, progression in innovation and furthermore school education which assists with improving basic thinking.For a superior and proficient production both of the kinds of investements were useful.

2) Once an individual was chosen for any activity, he/she will be given preparing for that activity by and large for a time of 6-12 months.During this period the administration will prepare the individuals in such a manner the abilities of the individuals ought to be upgraded for the necessities of the job.Even they atr prepared they give more marginal revenue product than the cash they get consequently.

Giving more cash at the preparation time frame itself isn't all that great and furthermore it might be infringement of the standard of optimality however thereafter the organization just will repay by giving less compensation after the preparation time frame.

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