Suppose a Competitive Firm in Both the Resource and Product

question 129

Multiple Choice

Suppose a competitive firm in both the resource and product markets is using inputs such that the marginal product of labor is 16 and the price of labor is $4 per unit, while the marginal product of capital is 12 and the price of capital is $3 per unit.At the maximum profit equilibrium point, the price of the product is

• A)$3.
• B)$4.
• C)$0.25.
• D)between $3 and $4.

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Definitions:

Noncontrolling Interest

The equity in a subsidiary not attributable, directly or indirectly, to a parent company.

Equity Method

The Equity Method is an accounting technique used by firms to assess the profits earned through their investments in other companies, recording these profits as income from the investment.

Noncontrolling Interest

An equity interest in a subsidiary held by investors other than the parent company, reflecting a share of ownership not providing control.

Goodwill

A non-tangible asset formed during the acquisition of a company for a sum greater than the fair value of its net assets that can be identified.