The figure given below shows the marginal revenue product (MRP) of accountants in a firm. Figure 14.2 MRP = MP ´ MR
According to Figure 14.2,if the marginal cost of the resource is $600:
A)1 unit of the resource is hired.
B)3 units of the resource are hired.
C)any number of units beyond 3 units is hired.
D)zero unit of the resource is hired.
E)7 units of the resource are acquired.

Question

The figure given below shows the marginal revenue product (MRP) of accountants in a firm. Figure 14.2  MRP = MP ´ MR
According to Figure 14.2,if the marginal cost of the resource is $600:
A)1 unit of the resource is hired. 
B)3 units of the resource are hired. 
C)any number of units beyond 3 units is hired. 
D)zero unit of the resource is hired. 
E)7 units of the resource are acquired.

Quizplus · Accepted Answer

When the marginal cost of the resource is $600, the firm will hire units of the resource up to the point where MRP = MC. From the given figure, it can be seen that at the point where MRP = MC, 3 units of the resource are hired. At this point, the MRP of the third unit is $1,800, which is equal to the marginal cost of $600. Therefore, the firm will hire 3 units of the resource, which is the best choice.

The Figure Given Below Shows the Marginal Revenue Product (MRP)