A firm can choose the optimal usage of input to maximize the profit by employing
ID: 1092458 • Letter: A
Question
A firm can choose the optimal usage of input to maximize the profit by employing the amount of input where
the input price equals the marginal revenue product (MRP).
the input price equals the marginal revenue (MR).
the input price equals the marginal cost (MC).
the input price equals the average total cost (ATC).
the input price equals the marginal revenue product (MRP).
the input price equals the marginal revenue (MR).
the input price equals the marginal cost (MC).
the input price equals the average total cost (ATC).
Explanation / Answer
Since Profit = Revenue - Cost, the inputs only affects the cost.
Therefore, we want to minimize cost to maximize profit.
This can be done by looking at the marginal revenue.
Answer is: the input price equals the marginal revenue (MR).
Answer is: the input price equals the marginal revenue (MR).