Suppose a Competitive Firm in Both the Resource and Product

question 235

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.