The table below shows the total output produced by different units of a resource. Assume that the resource and output markets are both perfectly competitive. The equilibrium price of the resource is $15.00, and the equilibrium price of the product is $0.50.Table 14.2
Marginal revenue product (MRP) of a resource is the product of the marginal product of the resource and the marginal revenue.
-If a resource is purchased and sold in a perfectly competitive market:
A)there are a large number of resource suppliers and the resources are identical.
B)there is a single buyer of resource and the resources are identical.
C)there is a single buyer of resource and the resources are differentiated.
D)there are a large number of resource suppliers and the resources are differentiated.
E)there are a large number of resource suppliers and there is no entry or exit.

Question

The table below shows the total output produced by different units of a resource. Assume that the resource and output markets are both perfectly competitive. The equilibrium price of the resource is $15.00, and the equilibrium price of the product is $0.50.Table 14.2
Marginal revenue product (MRP) of a resource is the product of the marginal product of the resource and the marginal revenue. 
-If a resource is purchased and sold in a perfectly competitive market:
A)there are a large number of resource suppliers and the resources are identical. 
B)there is a single buyer of resource and the resources are identical. 
C)there is a single buyer of resource and the resources are differentiated. 
D)there are a large number of resource suppliers and the resources are differentiated. 
E)there are a large number of resource suppliers and there is no entry or exit.

Quizplus · Accepted Answer

In a perfectly competitive market for a resource, there are a large number of resource suppliers, meaning that no single supplier can influence the market price. Additionally, the resources sold in the market are identical, meaning that there is no differentiation between them. These are the characteristics of a perfectly competitive market. Therefore, choice A) is the correct answer.

The Table Below Shows the Total Output Produced by Different