Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Calculate the marginal revenue product (MRP) of labor and capital.
B
Compare the ratio of MRP of labor to its wage with the ratio of MRP of capital to its price.
C
Adjust resource allocation based on the comparison results.
D
Assess changes in output levels and overall profitability.
Understanding the Answer
Let's break down why this is correct
Answer
To optimize resource allocation for profit maximization in a firm, the first step is to assess the current resources and their usage. This means looking at what resources are available, like money, materials, and labor, and how effectively they are being used. Next, the firm should analyze the costs and benefits of each resource to identify which ones contribute the most to profit. After that, the firm can reallocate resources to the areas that provide the highest returns, ensuring that every resource is used efficiently. For example, if a company finds that investing more in marketing leads to higher sales, it can shift some budget from less effective areas to marketing to maximize profits.
Detailed Explanation
First, you need to find out how much extra money each worker and machine makes. Other options are incorrect because This step comes after calculating MRP; You need to compare the MRP ratios before making changes.
Key Concepts
Marginal Revenue Product
Resource Allocation
Profit Maximization
Topic
Resource Allocation for Profit Maximization
Difficulty
hard level question
Cognitive Level
understand
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