A product price searcher (monopolist, oligopolist, or monopolistic competitive firm)will maximize its profits by hiring factors up to the point at which

Question

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A firm maximizes its profits when it hires factors until the point where the marginal revenue product (MRP) of the factor is equal to its marginal factor cost (MFC). This is because if MRP is greater than MFC, the firm could increase its profits by hiring more of that factor. If MRP is less than MFC, the firm could decrease its use of that factor to increase profits. Therefore, the optimal level of factor usage occurs where MRP equals MFC.

A Product Price Searcher (Monopolist, Oligopolist, or Monopolistic Competitive Firm)will