Asked by precious edwards on May 10, 2024
Verified
Assuming a firm is selling its output in a purely competitive market,its resource demand curve can be determined by:
A) multiplying total product by product price.
B) multiplying marginal product by product price.
C) dividing total revenue by marginal product.
D) comparing marginal product with various possible input prices.
Resource Demand Curve
A graph showing the relationship between the price of a resource and the quantity of that resource demanded by employers or producers.
Marginal Product
The marginal product is the additional output generated by employing one more unit of a specific input, ceteris paribus. It helps businesses decide on the optimal level of input usage.
- Examine the connection between Material Requirements Planning (MRP) and the employment choices made by companies.
Verified Answer
SM
Semsudin MuminovicMay 12, 2024
Final Answer :
B
Explanation :
In a purely competitive market, the firm is a price taker and must accept the market price for its output. Therefore, the marginal revenue generated by each unit of output is equal to the market price. The firm's resource demand is determined by multiplying the marginal product of each input by the market price and choosing the combination of inputs that minimizes the cost of producing a given level of output. So, multiplying marginal product by product price is the best option to determine the firm's resource demand curve in a purely competitive market.
Learning Objectives
- Examine the connection between Material Requirements Planning (MRP) and the employment choices made by companies.