If a firm is hiring variable resources D and F in imperfectly competitive input markets, it will maximize profits by employing D and F in such quantifies that A)$\mathrm{MRP} D / \operatorname{MRC} D=\mathrm{MRP} F / \mathrm{MRC} F=1$ B) MRP_D/ MRC_D= MRP_F/ MRC_F. C) MRP_D/ P_D= MRP_F/ P_F= 1. D) MRP_D/ P_D= MRP_F/ P_F.

Question

Quizplus · Accepted Answer

When hiring variable resources in imperfectly competitive input markets, a firm will maximize profits by employing each resource in such a quantity that the marginal revenue product (MRP) of the resource is equal to its marginal resource cost (MRC). Therefore, the condition that must be met for both resources D and F is MRPD/MRCD=MRPF/MRCF=1. This is exactly what is stated in Choice A.

If a Firm Is Hiring Variable Resources D and F MRPD/MRC⁡D=MRPF/MRCF=1\mathrm{MRP} D / \operatorname{MRC} D=\mathrm{MRP} F / \mathrm{MRC} F=1MRPD/MRCD=MRPF/MRCF=1

If a Firm Is Hiring Variable Resources D and F $\mathrm{MRP} D / \operatorname{MRC} D=\mathrm{MRP} F / \mathrm{MRC} F=1$