Multiple Choice QuestionA profitable firm will hire more of a resource up to the point at which that resource's Blank______.Multiple choice question.total revenue product is greater than its marginal resource costmarginal revenue product is equal to its marginal resource costmarginal revenue is less than its marginal resource costtotal revenue product is equal to its total resource cost
Question
Multiple Choice QuestionA profitable firm will hire more of a resource up to the point at which that resource's Blank______.Multiple choice question.total revenue product is greater than its marginal resource costmarginal revenue product is equal to its marginal resource costmarginal revenue is less than its marginal resource costtotal revenue product is equal to its total resource cost
Solution
The correct answer is: "marginal revenue product is equal to its marginal resource cost".
This is based on the economic principle that firms will continue to hire more of a resource as long as the additional revenue they receive from that resource (marginal revenue product) is greater than or equal to the additional cost of hiring that resource (marginal resource cost). Once the marginal revenue product is less than the marginal resource cost, the firm will stop hiring more of that resource.
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