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

-Under perfect competition in the resource market, the marginal factor cost curve:
A)is positively sloped.
B)is vertical.
C)is negatively sloped.
D)is horizontal.
E)does not exist.

Question

The figure given below shows the marginal revenue product (MRP) of accountants in a firm.Figure 14.2
MRP = MP X MR
 
-Under perfect competition in the resource market, the marginal factor cost curve:
A)is positively sloped. 
B)is vertical. 
C)is negatively sloped. 
D)is horizontal. 
E)does not exist.

Quizplus · Accepted Answer

Under perfect competition, marginal factor cost (MFC) equals the market wage rate, which is a constant in the short run. Therefore, the MFC curve is horizontal.

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