The following table shows total output produced by different units of capital.Table 14.3
The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue.
-In Table 14.3, how many units of capital will the firm hire if the price per unit of capital is $60?
A)1 unit of capital.
B)2 units of capital.
C)3 units of capital.
D)4 units of capital.
E)5 units of capital.

Question

The following table shows total output produced by different units of capital.Table 14.3
The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue. 
-In Table 14.3, how many units of capital will the firm hire if the price per unit of capital is $60?
A)1 unit of capital. 
B)2 units of capital. 
C)3 units of capital. 
D)4 units of capital. 
E)5 units of capital.

Quizplus · Accepted Answer

The firm will hire 2 units of capital if the price per unit of capital is $60 because the marginal product of capital is greater than the price of capital at that point.

The Following Table Shows Total Output Produced by Different Units