A firm is currently buying 1000 units of a resource each week in a competitive resource market at a price of $35 per unit. At that quantity (1000 units), the marginal product of the resource input is 5 units and the firm sells its product in a competitive product market for $5 per unit. The firm: Can increase its profits by buying more of this resource. Is maximizing profits at its present resource usage Can increase profit by buying less of this resource Has significant market power

A firm is currently buying 1000 units of a resource each week in a competitive resource market at a price of $35 per unit. At that quantity (1000 units), the marginal product of the resource input is 5 units and the firm sells its product in a competitive product market for $5 per unit. The firm: Can increase its profits by buying more of this resource. Is maximizing profits at its present resource usage Can increase profit by buying less of this resource Has significant market power

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 21P

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Convey how the marginal revenue productivity of a resource relates to a firm’s demand for that resource.
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