For a competitive profit-maximizing firm, the value-of-the-marginal-product curve for capital is the firm's ?
Correct answer: B. demand curve for capital
- A. supply curve of capital
- B. demand curve for capital
- C. production function
- D. marginal cost curve
Explanation
A competitive firm hires capital up to the point where the value of its marginal product equals the rental price of capital. Therefore, the value-of-the-marginal-product curve shows the firm's demand for capital.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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