If the price of a resource is greater than its marginal revenue product, the firm should
A)charge a higher price for its product.
B)make no change in the units of the resource used.
C)increase the units of the resource used in order to increase profits.
D)decrease the units of the resource used in order to increase profits.

Question

Quizplus · Accepted Answer

If the price of a resource is greater than its marginal revenue product, it means the cost of using an additional unit of the resource is not covered by the revenue generated from its use. Therefore, the firm should decrease the units of the resource used to increase profits, as this would reduce costs without significantly impacting revenue.

If the Price of a Resource Is Greater Than Its