Problem
A manager hires labor and rents capital equipment in a very competitive market. Currently the wage rate is $12 per hour and capital is rented at $9 per hour. If the marginal product of labor is 40 units of output per hour and the marginal product of capital is 55 units of output per hour, should the firm increase, decrease, or leave unchanged the amount of capital used in its production process?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.