If a Competitive Firm Is Maximizing Profits by Selling Output

question 74

Multiple Choice

If a competitive firm is maximizing profits by selling output for $2 per unit and paying a factor of production $10, then the marginal revenue product of that factor is:

• A)$2.
• B)$5.
• C)$10.
• D)$20.
• E)cannot tell from the information provided.

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Definitions:

Cost Of Equity

The return that investors expect for providing capital to a company, often seen as the risk-free rate plus a premium for the equity risk.

Growth Rate

The percentage change in the value of a specific metric (e.g., revenue, population) over a designated period.

Cost Of Capital

The earnings threshold a business needs to meet on investment endeavors to preserve its market worth and secure financing.

Debt-Equity Ratio

A financial comparison indicating the relationship of debt to equity in financing a company’s assets.