The figure given below represents the marginal revenue product (MRP)and the marginal factor cost (MFC)of a resource in the resource market. Figure 14.3 Consider the resource market shown in Figure 14.3.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 14.3  Consider the resource market shown in Figure 14.3.Given that the resource market is perfectly competitive, determine the equilibrium price of the resource.

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium price of a resource is determined at the point where MRP = MFC. From the graph, MRP intersects with MFC at $5, therefore $5 is the equilibrium price of the resource.

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