If a Firm Is Maximizing Profit and the Marginal Revenue

question 201

Multiple Choice

If a firm is maximizing profit and the marginal revenue product of labor is $10 and the marginal revenue product of capital is $30, then

• A) the marginal resource cost of labor is $3, and the marginal resource cost of capital is $0.33
• B) the marginal resource cost of labor equals the marginal resource cost of capital; both are $300
• C) the marginal resource cost of labor is 1/3 of the marginal resource cost of capital
• D) we have no way of knowing the marginal resource cost of either labor or capital.

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Definitions:

Price Paid

The total amount of money exchanged for a good or service at the time of purchase or transaction.

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net assets, capturing items such as brand reputation, customer relationships, and intellectual property.

Financial Reporting

The process of communicating financial information about a company to external parties such as investors, regulators, and creditors.

Impairment

Refers to a decrease in the recoverable value of an asset to below its carrying amount on the balance sheet, necessitating an adjustment to reflect its reduced worth.