Asked by Sharion Dielle on Jun 22, 2024
Verified
Firms will employ an input up to the point where
A) the wage rate equals the productivity of capital.
B) its marginal cost equals its marginal product.
C) the input's price equals its marginal revenue product.
D) the input's price equals its marginal product.
Marginal Cost
The extra cost incurred from producing one additional unit of a good or service.
Marginal Product
The additional output that results from a one-unit increase in the input of a production factor, holding all other inputs constant.
Marginal Revenue Product
the additional revenue generated from using one more unit of a factor of production.
- Discern the strategies used by firms to pinpoint optimal employment figures and set the remuneration they are ready to pay.
Verified Answer
MF
Mystic FallsJun 29, 2024
Final Answer :
C
Explanation :
Firms will continue to employ an additional unit of an input as long as the revenue generated by that additional unit (marginal revenue product) is at least equal to the cost of employing the input (its price). This ensures that the firm is maximizing profit by equating the input cost with the additional revenue generated by that input.
Learning Objectives
- Discern the strategies used by firms to pinpoint optimal employment figures and set the remuneration they are ready to pay.