Economics Question on Marginal Revenue Product (MRP)?

Question

A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when...

MY ANSWER: the marginal revenue product of the last dollar spent on each of the three resources is the same.
CORRECT ANSWER: MRPx/Px = MRPy/Py = MRPz/Pz = 1.

Can you please explain why this is? Thanks!

Answer 1

when MRPx/Px = 1, it means that for the price you're paying, you're getting the same amount of benefit (MRP). MRP is essentially the change in revenue from one extra unit, so if that change in revenue = the price, then you're operating at maximum efficiency. If you add more units, then price > MRP which means you're incurring losses for each addition. So because MRP needs to = P for maximization of profit, MRPx/Px = 1. This must be true for all the resources, so they must also = eachother.

Answer 2

Because the factor demand of the firm is MRPx, or MPx x P= Px, MPx is marginal product of X,P is price of the product and Px is price of factor X.For example, if X is labor, MRPx=wage rate.Then MRPx/wage rate=1.This is also true in the case of factor Y and Z. So MRPx/Px =1,MRPy/Py=1 and MRPz/Pz=1.

Or MRPx/Px=MRPy/Py=MRPz/Pz=1

Answer 3

Me the two. Sorry. wish somebody does.======= right that's a attempt: the fee of money, plus the fee of production, plus an kit exchange set-aside fund, plus worker perks and retirement, plus a nominal earnings, plus taxes -- in simple terms a start up. WOW! MELISSA IS a ten!!!!! stunning!