Answer the question on the basis of the following marginal product data for resources a and b.The output of these independent resources sells in a purely competitive market at $1 per unit. $\begin{array}{ccc}
\begin{array}{ccc}
\text { Inputs } \
\text { of a } & & \mathrm{MP}_{\mathrm{a}} \
\hline
1 & & 25 \
2 & & 20 \
3 & & 15 \
4 & & 10 \
5 & & 5 \
6 & & 2 \
7 & & 1
\end{array}
\begin{array}{c}
\begin{array}{c}
\text { Inputs } \
\text { of } b
\end{array} & & M P_{b} \
\hline
1 & & 40 \
2 & & 36 \
3 & & 32 \
4 & & 24 \
5 & & 20 \
6 & & 16 \
7 & & 8
\end{array}
\end{array}$ Refer to the given data.Assuming the prices of resources a and b are $5 and $8 respectively,what is the profit-maximizing combination of resources?
A) 7 of a and 7 of b.
B) 6 of a and 4 of b.
C) 5 of a and 7 of b.
D) 4 of a and 4 of b.

Question

Quizplus · Accepted Answer

The profit-maximizing combination of resources is where the marginal product of the last unit of each resource is equal to its price. For resource a, the marginal product of the last unit is 1, and the price is $5. For resource b, the marginal product of the last unit is 8, and the price is $8. Therefore, the profit-maximizing combination is 5 units of a and 7 units of b.

Answer the Question on the Basis of the Following Marginal