The profit-maximizing rule for a firm hiring both labor (L) and capital (C) under conditions of imperfect competition is
A)MPL / PL = MPC / PC.
B)MPL / MPC = MRCC / MRPL.
C)MRPL / MRCL = MRPC / MRCC = 1.
D)MRCL / MPL = MRCC / MPC = 1.

Question

Quizplus · Accepted Answer

The profit-maximizing condition for a firm in imperfect competition is to equate the marginal revenue product of labor (MRPL) to the marginal resource cost of labor (MRCL) and the marginal revenue product of capital (MRPC) to the marginal resource cost of capital (MRCC), both equal to 1.

The Profit-Maximizing Rule for a Firm Hiring Both Labor (L)