If a Firm Is Hiring Variable Resources D and F

question 109

Multiple Choice

If a firm is hiring variable resources D and F in imperfectly competitive input markets,it will maximize profits by employing D and F in such quantifies that:

• A) MRP_D/MRC_D = MRP_F/MRC_F = 1.
• B) MRP_D/MRC_D = MRP_F/MRC_F.
• C) MRP_D/P_D = MRP_F/P_F = 1.
• D) MRP_D/P_D = MRP_F/P_F.

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Definitions:

Economies of Scale

Financial advantages that firms enjoy as a result of the size of their operations, causing the per-unit expenditure to typically reduce as the operation's scale increases.

Barriers to Entry

Factors that prevent or hinder new competitors from easily entering into an industry or market, including high startup costs, stringent regulations, or strong brand loyalty among consumers.

Pure Monopoly

An economic condition where a single firm dominates a market, with no competition and barriers to entry for others, influencing price and supply of its product or service.

Isolated Town

A community located far from major population centers, often with limited access to goods, services, and outside communication.