A Profit-Maximizing Firm Will Hire an Additional Unit of a Resource

question 20

Multiple Choice

A profit-maximizing firm will hire an additional unit of a resource as long as the

• A)marginal product of the resource is greater than the marginal resource cost
• B)marginal product of the resource is less than the marginal resource cost
• C)marginal revenue product of the resource is greater than the marginal resource cost
• D)marginal revenue product of the resource is less than the marginal resource cost
• E)price of the resource is less than the marginal resource cost

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Definitions:

Flexible Budgeting

A budgeting process that allows for adjustments based on changes in the volume of activity or other factors.

Flexible Budgeting

A financial planning tool that adjusts budgets based on changes in actual activity levels, allowing for variable cost adjustment.

Operating Data

Information collected on the performance and efficiency of day-to-day operations within a company.

Budgeted Volume

The amount of production or sales a company plans to achieve within a certain period as part of its budgeting process.