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In gadget production the marginal product
of capital is 4 and the marginal product of labor is 2.
In widget production, the marginal product of capital is
8 and the marginal product of labor is 4. Based on this
information, what can we conclude about economic
efficiency?
There
is no change that will increase economic
efficiency.
Economic efficiency rises if labor is
shifted from gadgets to widgets.
Economic efficiency rises if labor is
shifted from widgets to gadgets.
Economic efficiency rises if both
labor and capital are shifted from widgets to
gadgets.
Economic efficiency rises if both
labor and capital are shifted from gadgets to
widgets.
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