Suppose a Competitive Firm in Both the Resource and Product

question 26

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:

Engine's Components

The various parts and mechanisms that make up an engine, each playing a specific role in its operation.

Null Hypothesis

The assumption in hypothesis testing that there is no significant difference between specified populations, any observed difference being due to sampling or experimental error.

Alternative Hypothesis

A hypothesis that contradicts the null hypothesis, proposing that there is a significant difference or relationship in the data being analyzed.

Manufacturer

A company or individual that produces finished goods from raw materials on a large scale using machinery.