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Factors of production (view source)
Revision as of 18:18, December 1, 2014
, 18:18, December 1, 2014narrowed cat
A profit maximizing firm will produce where the marginal product equals 0. If the marginal product is positive (greater than 0), the firm could increase output by employing more of the factor. If the marginal product is negative, the firm could increase output by employing comparatively less of the factor. When the marginal product equals 0, the firm cannot increase output by either increasing or decreasing output, so factors must be employed optimally.
A profit maximizing firm will produce where the marginal product equals 0. If the marginal product is positive (greater than 0), the firm could increase output by employing more of the factor. If the marginal product is negative, the firm could increase output by employing comparatively less of the factor. When the marginal product equals 0, the firm cannot increase output by either increasing or decreasing output, so factors must be employed optimally.
[[Category:Economics]]
[[Category:Factors and methods of production]]