The most general profit maximization rule is to choose quantity such that the quantity of an input employed makes:
A)w = VMP.
B)MFC = MRP.
C)MFC = VMP.
D)w = MRP.

Question

Quizplus · Accepted Answer

The most general profit maximization rule is to choose quantity such that Marginal Factor Cost (MFC) equals Marginal Revenue Product (MRP). This means that the additional cost of employing an additional unit of input should be equal to the additional revenue that unit of input generates. Therefore, option B is the correct answer. None of the other options mention MRP and MFC together as the profit maximization rule.

The Most General Profit Maximization Rule Is to Choose Quantity