A firm should reduce its employment of a resource whose marginal resource cost exceeds its marginal revenue product.

Question

Quizplus · Accepted Answer

A firm should reduce its employment of a resource when the marginal resource cost (the additional cost of employing one more unit of the resource) exceeds its marginal revenue product (the additional revenue generated from employing one more unit of the resource) to maximize profit.

A Firm Should Reduce Its Employment of a Resource Whose