In long- run equilibrium a firm that is a perfect competitor in its input and output markets will choose an input bundle such that for each input:
A)input price is equal to MRP.
B)MRP is greater than the VMP.
C)the marginal products of all inputs are identical.
D)MRP is less than VMP.

Question

Quizplus · Accepted Answer

In long-run equilibrium, a firm that is a perfect competitor in its input and output markets will choose an input bundle such that input price is equal to MRP. This is because in a perfectly competitive market, firms cannot influence the price of inputs or outputs, and must take them as given. The firm will continue to hire inputs until the MRP of each input is equal to its price, as this ensures that the firm is maximizing its profits.

In Long- Run Equilibrium a Firm That Is a Perfect