A condition for the profit-maximizing use of any factor of production is (where MP = marginal product,w = the price of a factor of production,p = price of one unit of the firmʹs output,MR = marginal revenue,MC = marginal cost,MRP = marginal revenue product):
A)MRP = MP × p
B)MR = MRP / P
C)MC = MR × w
D)w = MP × p
E)MRP = MR × MC

Question

Quizplus · Accepted Answer

The profit-maximizing condition for the use of a factor of production is when the factor's price (w) equals the marginal product of the factor (MP) times the price of the output (p), which is the value of the marginal product.

A Condition for the Profit-Maximizing Use of Any Factor of Production