The figure given below represents the marginal revenue product (MRP)and the marginal factor cost (MFC)of a resource in the resource market. Figure 28.3 Consider the resource market shown in Figure 28.3.Given that the resource market is perfectly competitive, determine the equilibrium price of the resource.

Question

The figure given below represents the marginal revenue product (MRP)and the marginal factor cost (MFC)of a resource in the resource market. Figure 28.3  Consider the resource market shown in Figure 28.3.Given that the resource market is perfectly competitive, determine the equilibrium price of the resource.

Quizplus · Accepted Answer

In a perfectly competitive resource market, the equilibrium price of the resource will occur where marginal revenue product (MRP) equals marginal factor cost (MFC). From the graph, MRP intersects MFC at a price of $5. Therefore, the equilibrium price of the resource is $5. Choice C is the correct answer.

The Figure Given Below Represents the Marginal Revenue Product (MRP)and