A Firm's Most Profitable Level of a Factor of Production

question 22

Multiple Choice

A firm's most profitable level of a factor of production hired in a perfectly competitive market occurs at a point at which there is equality between the:

• A) total cost and total revenue curves.
• B) marginal factor cost and product demand curves.
• C) marginal factor cost and marginal revenue product curves.
• D) average factor cost and marginal revenue product curves.

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Definitions:

Quota

A quota is a government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a particular time frame.

Tariff

A tax imposed by a government on goods and services imported from other countries, intended to increase their price and make domestic products more competitive.

Most-Favored-Nation Status

A trade status granting a nation the best trading terms available to any other nation, such as lowest tariffs or highest import quotas.

Negotiated Tariff Rates

Tariff rates determined through bargaining between countries, rather than set unilaterally, often resulting in lower duties.