If a firm is maximizing profit and the marginal revenue product of labor is $10 and the marginal revenue product of capital is $30, then
a. the marginal resource cost of labor is $3, and the marginal resource cost of capital is $0.33
b. the marginal resource cost of labor is $0.33, and the marginal resource cost of capital is $3
c. the marginal resource cost of labor equals the marginal resource cost of capital; both are $300
d. the marginal resource cost of labor is 1/3 of the marginal resource cost of capital
e. we have no way of knowing the marginal resource cost of either labor or capital
D
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An advantage of using the cross-sectional regression method in estimating production is that
A) the problem of technological change over time is overcome. B) there is no need to adjust data, which are in monetary terms for geographical differences. C) we can assume that all plants operate at their most efficient input combinations. D) All of the above
The above figure shows the short run cost curves for a typical firm in a competitive market. If price = 8, then the firm
A) is earning positive profits. B) should produce 50 units. C) should shut down. D) None of above.