A competitive firm will maximize profit by hiring the amount of an input at whic

Question

A competitive firm will maximize profit by hiring the amount of an input at which Select one: a. the additional output from the last unit of the input hired exceeds the additional cost of the last unit by the largest amount. b. the additional revenue from the last unit of the input hired exceeds the additional cost of the last unit by the largest amount. c. the last unit of the input hired adds the same amount to total revenue as to total cost. d. the last unit of the input hired adds the same amount to total output as to total cost.

Explanation / Answer

A competitive firm will maximize profit by hiring the amount of an input at which the value of the marginal product added by one additional input is equal to the amount of cost added by it.

In other words, it means the addition to the total revenue equals or is closest to the addition to the cost. This means the required units of input is the one that adds the same amount to total revenue as to total cost.

Hence the correct option is C.

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