if the price of the output good is $4, the price of factor 1 is $1, and the price of factor 2 is $3, what is the profit-maximizing amount of factor 1?
A)8
B)2
C)1
D)0
E)There is not enough information to tell.

Question

if the price of the output good is $4, the price of factor 1 is $1, and the price of factor 2 is $3, what is the profit-maximizing amount of factor 1?
A)8
B)2
C)1
D)0 
E)There is not enough information to tell.

Quizplus · Accepted Answer

The profit-maximizing amount of factor 1 is found by setting the marginal product of factor 1 equal to the price of factor 1. In this case, the marginal product of factor 1 is 8, so the profit-maximizing amount of factor 1 is 8.

If the Price of the Output Good Is $4, the Price