A firm maximizes profits when the ________ equals the ________.
A) actual marginal product of capital; actual marginal product of labour
B) actual marginal product of capital; expected marginal product of capital
C) expected marginal product of capital; opportunity cost of capital
D) expected marginal product of capital; user cost of capital

Question

Quizplus · Accepted Answer

The user cost of capital represents the opportunity cost of investing in capital. Therefore, a firm maximizes profits when the expected marginal product of capital equals the user cost of capital.

A Firm Maximizes Profits When the ________ Equals the ________

A Firm Maximizes Profits When the Equals the