Assuming a competitive resource market, a firm is hiring resources in the profit-maximizing amounts when the
A)firm's total outlay on resources is minimized.
B)marginal revenue product of each resource is equal to its price.
C)price of each resource employed is the same.
D)marginal revenue product of the last unit of each resource hired is the same.

Question

Quizplus · Accepted Answer

In a competitive resource market, a firm maximizes profit by hiring resources up to the point where the marginal revenue product (MRP) of each resource equals its price. This ensures that the cost of the last unit of resource hired is exactly covered by the revenue it generates.

Assuming a Competitive Resource Market, a Firm Is Hiring Resources