A Firm Purchases a Factor of Production in a Competitive

question 125

Multiple Choice

A firm purchases a factor of production in a competitive market. At the current purchase rate the MRP of the factor is greater than the marginal expenditure for the factor. Thus, the firm:

• A) can increase profit by reducing the employment of the factor of production.
• B) is now maximizing profit.
• C) should not use this factor of production because it has no potential in generating a profit.
• D) can increase profit by expanding the employment of the factor of production.

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Definitions:

Mesodermal Tissue

The middle layer of embryonic tissue that develops into muscle, bone, and the circulatory system among others.

Neural Plate

The neural plate is the flat layer of embryonic cells that develops into the neural tube, eventually forming the brain and spinal cord.

Differentiation

The process by which cells or tissues undergo a change toward a more specialized form or function during development.

Development

The process through which organisms grow and change over time, involving physical, biological, and sometimes psychological transformations.