The following table shows total output produced by different units of capital. Table 14.3
The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue.
In Table 14.3, if there exists perfect competition in the capital market and the price per unit of capital is ten times the price of the product, the marginal factor cost at the profit maximizing level of employment is:
Definitions:
Contractual Interest Rate
The agreed-upon interest rate specified in a loan or bond contract, which the borrower must pay to the lender.
Market Interest Rate
The prevailing rate of interest determined by supply and demand in the financial markets.
Straight-Line Method
A method of depreciation that allocates an equal amount of the depreciable cost of an asset to each year of its useful life.
Carrying Value
The net amount at which an asset or liability is reported on the balance sheet, calculated as original cost minus any depreciation, amortization, or impairment costs.
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