2. Profit maximization A profit-maximizing firm will use less of a factor of production when: The extra cost of using an additional factor unit is greater than the marginal revenue product of the additional factor unit. O The marginal physical product of the additional factor unit is greater than the marginal revenue product (MRP) of the additional factor unit. O The marginal physical product of the additional factor unit is less than the marginal revenue product of the additional factor unit. O The extra cost of using an additional factor unit is greater than the marginal physical product (MPP) of the additional factor unit. Apply your answer as an argument to the labor market-when the wage rate is below the MRP, the firm should hire workers. Therefore, what is the relationship between a perfectly competitive firm's MRP curve for an input and that firm's demand curve for that input? O The firm's demand curve for an input is the downward-sloping portion of the MRP curve. O They are identical except for the units (and scale) of their vertical axes. O They are unrelated.

2. Profit maximization A profit-maximizing firm will use less of a factor of production when: The extra cost of using an additional factor unit is greater than the marginal revenue product of the additional factor unit. O The marginal physical product of the additional factor unit is greater than the marginal revenue product (MRP) of the additional factor unit. O The marginal physical product of the additional factor unit is less than the marginal revenue product of the additional factor unit. O The extra cost of using an additional factor unit is greater than the marginal physical product (MPP) of the additional factor unit. Apply your answer as an argument to the labor market-when the wage rate is below the MRP, the firm should hire workers. Therefore, what is the relationship between a perfectly competitive firm's MRP curve for an input and that firm's demand curve for that input? O The firm's demand curve for an input is the downward-sloping portion of the MRP curve. O They are identical except for the units (and scale) of their vertical axes. O They are unrelated.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. Profit maximization
A profit-maximizing firm will use less of a factor of production when:
The extra cost of using an additional factor unit is greater than the marginal revenue product of the additional factor unit.
O The marginal physical product of the additional factor unit is greater than the marginal revenue product (MRP) of the additional
factor unit.
O The marginal physical product of the additional factor unit is less than the marginal revenue product of the additional factor unit.
O The extra cost of using an additional factor unit is greater than the marginal physical product (MPP) of the additional factor unit.
Apply your answer as an argument to the labor market-when the wage rate is below the MRP, the firm should hire
workers.
Therefore, what is the relationship between a perfectly competitive firm's MRP curve for an input and that firm's demand curve for that input?
O The firm's demand curve for an input is the downward-sloping portion of the MRP curve.
O They are identical except for the units (and scale) of their vertical axes.
O They are unrelated.

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