The following table shows total output produced by different units of capital.Table 14.3
The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue.
-The producer can raise the level of profit by hiring more units of a resource if:
A)the marginal revenue product of the resource is equal to the marginal factor cost.
B)the marginal factor cost becomes negative.
C)the marginal revenue product of the resource is greater than the marginal factor cost.
D)the marginal revenue product falls to zero.
E)the marginal revenue product of the resource is less than the marginal factor cost.

Question

The following table shows total output produced by different units of capital.Table 14.3
The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue. 
-The producer can raise the level of profit by hiring more units of a resource if:
A)the marginal revenue product of the resource is equal to the marginal factor cost. 
B)the marginal factor cost becomes negative. 
C)the marginal revenue product of the resource is greater than the marginal factor cost. 
D)the marginal revenue product falls to zero. 
E)the marginal revenue product of the resource is less than the marginal factor cost.

Quizplus · Accepted Answer

The producer can raise the level of profit by hiring more units of a resource only if the marginal revenue product of the resource is greater than the marginal factor cost. This is because hiring additional units of a resource will increase total cost, but only if the marginal revenue product is greater than the marginal factor cost will this result in an increase in profits. Therefore, choice C is the best choice.

The Following Table Shows Total Output Produced by Different Units