A Condition for the Profit-Maximizing Use of Any Factor of Production

question 61

Multiple Choice

A condition for the profit-maximizing use of any factor of production is
Where MP = marginal product, w = the price of a factor of production, p = price of one unit of the firmʹs output, MR = marginal revenue, MC = marginal cost, MRP = marginal revenue product) :

• A) MRP = MP × p
• B) MR = MRP P
• C) MC = MR × w
• D) w = MP × p
• E) MRP = MR × MC

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Definitions:

Demand Curve

A visual representation that maps out the correlation between the price level of a good and how much of it consumers are willing to purchase.

Collusion

A secret or illegal cooperation or conspiracy, especially between businesses to limit competition and raise prices.

Marginal Cost

The financial outlay involved in producing a supplementary unit of a good or service.

Crude Oil

A naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials, used as a primary energy source.