A firm is hiring resources X,Y,and Z in the profit-maximizing amounts when: A) MRP_x/P_x equals MRP_y/Py equals MRP_z/P_z equals 1. B) the sum of the MRPs of the three resources is at a minimum. C) the marginal revenue productivity of all three resources is the same. D) the marginal revenue product of the last dollar spent on each of the three resources is the same.

Question

Quizplus · Accepted Answer

MRP_x/P_x equals MRP_y/Py equals MRP_z/P_z equals 1 means that the firm is hiring each resource up to the point where the marginal revenue product of the last dollar spent on that resource is equal to the price of that resource. This is the profit-maximizing condition.

A Firm Is Hiring Resources X,Y,and Z in the Profit-Maximizing