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:

Tax Rate

The fraction of earnings on which the government imposes taxes for individuals or corporations.

Consolidation Worksheet Entry

An accounting entry used in the preparation of consolidated financial statements which adjusts for intercompany transactions and balances.

Treasury Stock

Shares of a company's own stock that it has repurchased from investors but not yet retired.

Consideration Transferred

The payment made by an acquirer to obtain control of an acquiree, which could include cash, assets, or other types of financial agreements.