A profit-maximizing firm will hire inputs until MRP = P of the input.

Question

Quizplus · Accepted Answer

A profit-maximizing firm will hire inputs until the Marginal Revenue Product (MRP) of the input is equal to the Price (P) of the input. This is the point where the marginal cost of hiring an additional unit of the input equals the marginal benefit in terms of increased revenue generated by that unit of input. At this point, the firm is maximizing its profits.

A Profit-Maximizing Firm Will Hire Inputs Until MRP = P