(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?
(2) Make sure you really explain your answer. If you wish, you can also include an example while explaining your answer in detail.
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.