The price paid for any factor of production tends to be equal to:
A)the wage rate
B)the value of the marginal product of that input
C)the price of the product sold by the firm that inputs
D)the price of the product sold by the firm that buys the inputs

Question

Quizplus · Accepted Answer

The price paid for any factor of production tends to be equal to the value of the marginal product of that input. This principle is based on the economic theory that firms will pay for an input up to the point where the cost of the input equals the additional revenue generated by that input, known as its marginal product.

The Price Paid for Any Factor of Production Tends to Be