For a firm hiring a resource in a perfectly competitive resource market, its demand curve for the resource is its
A)marginal product curve
B)marginal revenue product curve
C)marginal resource cost curve
D)marginal revenue curve
E)total revenue curve

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price-taker, meaning it has no control over the price of the resource. Therefore, the demand curve for the resource is equivalent to its marginal revenue product (MRP) curve, which shows how much revenue the firm can generate by employing an additional unit of the resource. The firm will continue to hire units of the resource until the MRP equals the resource's market price, which is equivalent to its marginal resource cost (MRC) curve.

For a Firm Hiring a Resource in a Perfectly Competitive