The rule for the optimal use of any input states that
A) when MRP is less than price, profit will increase when more of that resource is utilized.
B) when MRP is greater than resource price, profit will increase when more of that resource is utilized.
C) when MRP equals price, profit will increase when less of that resource is utilized.
D) when MRP is greater than resource price, profit will increase when less of that resource is utilized.
E) resources should be used only if MRP exceeds product price.

Question

Quizplus · Accepted Answer

When the Marginal Revenue Product (MRP) is greater than the resource price, it means that the additional revenue generated by using one more unit of the resource exceeds the cost of that resource, thus increasing profit.

The Rule for the Optimal Use of Any Input States