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Suppose a Competitive Firm in Both the Resource and Product

Question 26

Multiple Choice

Suppose a competitive firm in both the resource and product markets is using inputs such that the marginal product of labor is 16 and the price of labor is $4 per unit, while the marginal product of capital is 12 and the price of capital is $3 per unit. At the maximum profit equilibrium point, the price of the product is


A) $3.
B) $4.
C) $0.25.
D) between $3 and $4.

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