Available under Creative Commons-NonCommercial-ShareAlike 4.0 International License.
A firm uses additional units of a factor until marginal revenue product equals marginal factor cost.Capital is no different from other factors of production, save for the fact that the revenues and costs it generates are distributed over time. As the first step in assessing a firm’s demand for capital, we determine the present value of marginal revenue products and marginal factor costs.
- 1184 reads
