What is the profit-maximizing condition for the use of a resource?
What will be an ideal response?
The profit-maximizing condition occurs when the marginal revenue product and the marginal resource cost are equal. When they are equal, an additional unit of the resource would cause a greater increase in cost than in revenue and a unit less would result in revenue being greater than the cost of that reduced unit, producing incentive to increase production. In both cases, costs could be minimized and revenues maximized by moving the quantity to the level where MRP=MRC, thus maximizing profit.
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The working-age population of people over the age of 16 can be divided into two groups, people
A) in the labor force and people looking for work. B) with a job and people actively seeking a job. C) looking for work and those in the U.S. Armed Forces. D) in the labor force and people with a job. E) in the labor force and people who are not in the labor force.
If two duopolists can stick to a cartel agreement to boost their prices, then both
A) earn greater profits than if they did not collude. B) price at marginal cost. C) price below average total cost. D) decrease their economic profits. E) increase their production so that each produces more than if they did not collude.
How does an unusually warm winter affect the equilibrium price and quantity of gloves?
A) It raises both the price and the quantity. B) It raises the price and decreases the quantity. C) It lowers the price and increases the quantity. D) It lowers both the price and the quantity.
According to the text, a rise in the interest rate
A. may either raise or lower consumer savings. B. will raise consumer savings. C. will lower consumer savings. D. will cause the rental cost of capital to decrease.