Consider a Firm's Demand for a Factor of Production

question 32

Multiple Choice

Consider a firm's demand for a factor of production.A perfectly competitive firm will continue to increase production until the marginal cost of the variable factor is

• A)greater than the marginal revenue of the firm's output.
• B)less than the marginal revenue of the firm's output.
• C)equal to zero.
• D)equal to the marginal revenue product of the factor.
• E)equal to the marginal revenue of the firm's output.

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Definitions:

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants for machines.

Completed Goods

Products that have undergone the entire production process and are ready for sale.

Process Cost Summary

A process cost summary outlines the costs associated with each step of a manufacturing process, detailing the expenses for materials, labor, and overhead for each process stage.

Work in Process

Inventory that includes materials that are currently being processed into finished goods but are not yet complete.