Consider the table above. Assume that the resource and output markets are both perfectly competitive. The equilibrium price of the resource is $12.50 and the equilibrium price of the product is $0.50. How many units of the resource will be hired by a profit maximizing firm?a. 1 unitb. 2 unitsc. 3 unitsd. 4 unitse. Not enough information provided. ### Marginal Product AnalysisThis table demonstrates the relationship between the units of a resource utilized and the resulting total product output. It is a fundamental concept in economics often used to illustrate how different quantities of a production factor can affect output levels.#### Table: Relationship Between Units of Resource and Total Product| Units of Resource | Total Product ||-------------------|---------------|| 0 | 0 || 1 | 50 || 2 | 105 || 3 | 140 || 4 | 165 |**Explanation:**- **Units of Resource:** The left column represents the number of resource units employed in production. This could include labor, raw materials, or any other input necessary for creating a product.- **Total Product:** The right column indicates the total amount of product produced with the corresponding units of the resource. This is an aggregate measure showing the overall production output.**Observation:**- Initially, as the number of resource units increases from 0 to 1, the total product increases from 0 to 50.- With each additional unit of resource, total product increases, although the incremental gains may vary.- This table is useful for understanding concepts like marginal product, which refers to the additional output generated by adding one more unit of a resource.Understanding how resources impact total production allows businesses and economists to make informed decisions about resource allocation and efficiency improvements.

Answered: Consider the table above. Assume that…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the table above. Assume that the resource and output markets are both perfectly competitive. The equilibrium price of the resource is $12.50 and the equilibrium price of the product is $0.50. How many units of the resource will be hired by a profit maximizing firm?

a. 1 unit

b. 2 units

c. 3 units

d. 4 units

e. Not enough information provided.

### Marginal Product Analysis

This table demonstrates the relationship between the units of a resource utilized and the resulting total product output. It is a fundamental concept in economics often used to illustrate how different quantities of a production factor can affect output levels.

#### Table: Relationship Between Units of Resource and Total Product

| Units of Resource | Total Product |
|-------------------|---------------|
| 0 | 0 |
| 1 | 50 |
| 2 | 105 |
| 3 | 140 |
| 4 | 165 |

**Explanation:**

- **Units of Resource:** The left column represents the number of resource units employed in production. This could include labor, raw materials, or any other input necessary for creating a product.

- **Total Product:** The right column indicates the total amount of product produced with the corresponding units of the resource. This is an aggregate measure showing the overall production output.

**Observation:**

- Initially, as the number of resource units increases from 0 to 1, the total product increases from 0 to 50.
- With each additional unit of resource, total product increases, although the incremental gains may vary.
- This table is useful for understanding concepts like marginal product, which refers to the additional output generated by adding one more unit of a resource.

Understanding how resources impact total production allows businesses and economists to make informed decisions about resource allocation and efficiency improvements.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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