What is the relevance of the marginal productivity principle in explaining the use of inputs in production?
According to the marginal productivity principle, when factor markets are competitive, it always pays a profit-maximizing firm to hire the amount of any input that makes the marginal revenue product equal to the price of the input.
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Some cities have a relatively high residential property tax, while others have a low residential property tax. Give an explanation for this.
What will be an ideal response?
Tom is an organic gardener. For several years, he produced only for his own consumption, but this year he has sold his vegetables at a farmer's market. The vegetables Tom produces a. are not included in GDP, not for this year nor for previous years
b. are included in GDP for this year, but prior to this year the value of his vegetables was not included in GDP. c. would be included in GDP only if the vegetables were registered with the Department of Agriculture. d. are not part of GDP, since vegetables are not a good included in GDP.
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Jack is considering whether to play the first game. If Jack only cares about the expected value of the outcome and does not care about risk, he should:
A. not play the game, since it costs $5 and the expected payoff is $5.75. B. play the game since it costs $5.75 and the expected payoff is $5. C. not play the game since it costs $5.75 and the expected payoff is $5. D. play the game since it costs $5, and the expected payoff is $5.75.
Which of the following is a free rider?
A. Butch breeds the feared pit bulls, and his neighbors now erect fences around their property. B. Fred watches many public television programs, but he has never sent in a contribution. C. Barry steals candy from the store where he works. D. Betty regularly uses the local public library.