If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,
A) more of the resource should be used.
B) less of the resource should be used.
C) the firm should pay a lower price for the resource.
D) the firm should pay a higher price for the resource.
E) the firm is using the optimal amount of the resource.

Question

Quizplus · Accepted Answer

If the marginal resource cost is less than the marginal revenue product, the firm can increase its profit by using more of the resource, as each additional unit of the resource adds more to revenue than it costs.

If a Firm Is Using a Resource Hired in a Perfectly