The figure given below shows the marginal revenue product (MRP) of accountants in a firm.Figure 14.2
MRP = MP X MR

-According to Figure 14.2, if the marginal cost of the resource is $600:
A)1 unit of the resource is hired.
B)3 units of the resource are hired.
C)any number of units beyond 3 units is hired.
D)zero unit of the resource is hired.
E)7 units of the resource are acquired.

Question

The figure given below shows the marginal revenue product (MRP) of accountants in a firm.Figure 14.2
MRP = MP X MR
 
-According to Figure 14.2, if the marginal cost of the resource is $600:
A)1 unit of the resource is hired. 
B)3 units of the resource are hired. 
C)any number of units beyond 3 units is hired. 
D)zero unit of the resource is hired. 
E)7 units of the resource are acquired.

Quizplus · Accepted Answer

At the point where the MRP curve intersects the marginal cost curve (MC = $600), the firm maximizes its profit by hiring the number of units for which MRP = MC. From Figure 14.2, this occurs when there are three units of the resource hired. Therefore, the answer is B.

The Figure Given Below Shows the Marginal Revenue Product (MRP)