2010 FRQ #2- Resource Market and Firm

The video tutorial covers the concept of resource markets, focusing on a company called John Lamb that operates in a perfectly competitive market. It explains the equilibrium in the market where MRP equals MRC, and how changes in demand for widgets affect the marginal revenue product. The tutorial also discusses the least cost rule, providing examples to illustrate how to achieve cost efficiency in production.

What is the relationship between MRP and MRC in the context of hiring workers?

Describe the equilibrium price and quantity in a perfectly competitive resource market.

Explain how a decrease in the demand for widgets affects the marginal product of labor.

How does the price of widgets affect the marginal revenue product of machines?

What does the least cost rule imply about the marginal product per dollar spent on labor and machines?