If a perfectly competitive firm can acquire the services of as much capital as it wishes at a constant rental rate of r per year, it should employ capital up to the point at which the

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Quizplus · Accepted Answer

The firm should employ capital up to the point where the value of the marginal product of capital is equal to the rental rate, as this is where it maximizes profits. Option D aligns with this condition, as the value of the marginal product of capital represents the additional revenue earned from employing an additional unit of capital, which should be compared to the rental rate in order to determine the optimal level of capital usage.

If a Perfectly Competitive Firm Can Acquire the Services of as Much