Changes

'''Honors: 8. “Marginal revenue product” is the change in total revenue resulting from a unit change in the quantity of a variable unit employed. Now redo and explain this question from the exam: “Factor of production” is any input (e.g., land, labor and capital) used to produce output. A monopolist will continue to purchase a particular factor of production until:  

'''Honors: 8. “Marginal revenue product” is the change in total revenue resulting from a unit change in the quantity of a variable unit employed. Now redo and explain this question from the exam: “Factor of production” is any input (e.g., land, labor and capital) used to produce output. A monopolist will continue to purchase a particular factor of production until:  

<br>(a) average factor cost equals average revenue product  

'''<br>(a) average factor cost equals average revenue product'''

<br>(b) marginal factor cost equals marginal revenue  

'''<br>(b) marginal factor cost equals marginal revenue'''

<br>(c) marginal factor cost equals marginal revenue product  

'''<br>(c) marginal factor cost equals marginal revenue product'''

<br>(d) average factor cost equals marginal favor cost'''

'''<br>(d) average factor cost equals marginal favor cost'''

The correct answer is (c), because the owner can increase profits by increasing his input until he does not make enough additional revenue (marginal revenue product) to cover his additional cost (marginal factor cost) for that additional input.

The correct answer is (c), because the owner can increase profits by increasing his input until he does not make enough additional revenue (marginal revenue product) to cover his additional cost (marginal factor cost) for that additional input.