A profit-maximizing firm will continue to employ land until A) MP_LAND = P_LAND. B) MRP_LAND = 0. C) MRP_LAND = MP_LAND. D) MRP_LAND = P_LAND.

Question

Quizplus · Accepted Answer

The correct answer is D) MRPS (Marginal Revenue Product of Land) = P (Price of Land). This is because a profit-maximizing firm will continue to employ an additional unit of land as long as the revenue generated from that additional unit (MRPS) is equal to the cost of employing it (P).

A Profit-Maximizing Firm Will Continue to Employ Land Until