If a firm hires a resource in a perfectly competitive resource market,
A)it must also be a price taker in the product market
B)it must also be a monopolist in the product market
C)it faces a horizontal marginal resource cost curve
D)it faces an upward-sloping marginal resource cost curve
E)it faces a downward-sloping marginal resource cost curve

Question

Quizplus · Accepted Answer

In a perfectly competitive resource market, the firm is a price taker and faces a horizontal supply curve for the resource. Therefore, the marginal resource cost (MRC) is constant and equal to the resource price. As a result, the marginal resource cost curve will also be horizontal.

If a Firm Hires a Resource in a Perfectly Competitive