Suppose that the marginal product of the last worker employed by a firm is 40 units of output per day and the daily wage that the firm must pay is $20, while the marginal product of the last machine rented by the firm is 120 units of output per day and the daily rental price of the machine is $30. Answer your question using MRP, MWC and other relevant topics in Labor Economics
a. Why is this firm not maximizing output or minimising costs in the long run?
b. How can the firm maximize output or minimise costs?