Profit-maximizing firms will expand their employment of each variable resource until
A) the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource.
B) other firms realize they can't compete.
C) the MRP of the resource is below the cost of the resource.
D) the MRP of the resource is above the cost of the resource.

Question

Quizplus · Accepted Answer

Firms maximize profit by employing resources up to the point where the Marginal Revenue Product (MRP) equals the resource's price, ensuring that the cost of employing an additional unit is covered by the revenue it generates.

Profit-Maximizing Firms Will Expand Their Employment of Each Variable Resource