Assume a firm is hiring resources in a competitive market. In order to maximize profits, the firm will hire resources in the amounts where
a) the firm's total spending on resources is minimized.
b) the marginal revenue product of each resource is equal to its price.
c) the price of each resource employed is equal to its price.
d) the marginal revenue product of the last unit of each resource hired is the same.
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Answer:
b
Explanation:
a profit maximizing firm will hire resources up to the point where the marginal revenue product is equal to the price
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