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6 May, 20:44

A profit-maximizing firm will Multiple Choice

a. expand employment if marginal revenue product exceeds marginal resource cost.

b. reduce employment if marginal revenue product exceeds marginal resource cost.

c. expand employment if marginal revenue product equals marginal resource cost.

d. reduce employment if marginal revenue product equals marginal resource cost.

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Answers (1)
  1. 6 May, 21:16
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    The correct answer is option a.

    Explanation:

    The marginal revenue product can be defined as the additional revenue earned because of hiring an additional unit of labor. In other words, it measures the change in total revenue due to a change in the quantity of input employed.

    The marginal resource cost is the cost of hiring an additional unit of input. In other words, it is the change in total cost due to a change in the quantity of input employed.

    A firm is able to maximize profit if both marginal revenue product and marginal resource cost are equal. If the marginal revenue product is greater than the marginal resource cost, the firm will be able to maximize profit by hiring more inputs.
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Home » Business » A profit-maximizing firm will Multiple Choice a. expand employment if marginal revenue product exceeds marginal resource cost. b. reduce employment if marginal revenue product exceeds marginal resource cost. c.
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