Asked by Janay Johnson on Jun 09, 2024
Verified
A profit-maximizing firm will
A) expand employment if marginal revenue product exceeds marginal resource cost.
B) reduce employment if marginal revenue product exceeds marginal resource cost.
C) expand employment if marginal revenue product equals marginal resource cost.
D) reduce employment if marginal revenue product equals marginal resource cost.
Profit-Maximizing Firm
A company that operates in such a way as to maximize its profits by adjusting output levels based on market conditions.
Marginal Revenue Product
Refers to the additional revenue generated from employing one more unit of a resource or factor of production.
Marginal Resource Cost
The additional cost incurred by acquiring or using one more unit of a resource.
- Acquire knowledge on the marginal revenue product (MRP) concept and its impact on establishing employment numbers and wage scales.
Verified Answer
TB
Taziana BluntJun 09, 2024
Final Answer :
A
Explanation :
A profit-maximizing firm will expand employment if the marginal revenue product (MRP) exceeds the marginal resource cost (MRC) because this indicates that the additional revenue from employing one more unit of the resource is greater than the cost of that resource, leading to increased profits.
Learning Objectives
- Acquire knowledge on the marginal revenue product (MRP) concept and its impact on establishing employment numbers and wage scales.