The figure given below represents the marginal revenue product (MRP) and the marginal factor cost (MFC) of a resource in the resource market. Figure 14.3 Consider the resource market shown in Figure 14.3.Given that the resource market is perfectly competitive,determine the equilibrium price of the resource.
A)$8
B)$3
C)$5
D)$4
E)Cannot be determined from the information given

Question

The figure given below represents the marginal revenue product (MRP) and the marginal factor cost (MFC) of a resource in the resource market. Figure 14.3  Consider the resource market shown in Figure 14.3.Given that the resource market is perfectly competitive,determine the equilibrium price of the resource.
A)$8 
B)$3 
C)$5 
D)$4 
E)Cannot be determined from the information given

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium price for the resource will be where MRP=MFC. From the graph, we can see that MRP intersects MFC at $5. Therefore, $5 is the equilibrium price of the resource.

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