The figure given below shows the marginal revenue product (MRP)of accountants in a firm. Figure 28.2 MRP = MP ´ MR
According to Figure 28.2, if the marginal cost of the resource is $600:

Question

The figure given below shows the marginal revenue product (MRP)of accountants in a firm. Figure 28.2  MRP = MP ´ MR
According to Figure 28.2, if the marginal cost of the resource is $600:

Quizplus · Accepted Answer

When the marginal cost of the resource is $600, the profit-maximizing rule is to hire the resource up to the point where MRP equals the marginal cost. From the graph, we can see that at 3 units of the resource, MRP equals $600. At this point, hiring an additional unit would cost more than its contribution to revenue, resulting in a decrease in profit. Therefore, the best choice is to hire 3 units of the resource.

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