Use the following to answer question(s):
-(Exhibit: Marginal Revenue Product and Demand) Assume that the product price is $2 per unit, the price of the factor of production is $40 per unit, and 4 units are being hired.Profit can be maximized by hiring _______ unit(s).

Question

Use the following to answer question(s):  
-(Exhibit: Marginal Revenue Product and Demand) Assume that the product price is $2 per unit, the price of the factor of production is $40 per unit, and 4 units are being hired.Profit can be maximized by hiring _______ unit(s).

Quizplus · Accepted Answer

To maximize profit, a firm should continue hiring additional units of a factor of production until the marginal revenue product (MRP) equals the factor's price. Given the product price is $2 and 4 units are being hired, without the specific MRP values, we infer that hiring 1 more unit could potentially align the MRP with the factor price of $40, assuming diminishing returns.

Use the Following to Answer Question(s)