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AP® Microeconomics

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Resource Price: Calculation

APMICR-AHGRNG

ABC Corporation competes for resources in a perfectly competitive resource market and is currently employing labor and capital in profit-maximizing quantities. The last unit of labor it employs increases output from 50 to 54, and the last unit of capital it employs increases output from 70 to 80.

It sells its product in a perfectly competitive product market for \$2 per unit.

How much does it pay for labor and capital?

A

\$4 for labor; \$10 for capital

B

\$2 for labor; \$5 for capital

C

\$8 for both labor and capital

D

\$10 for both labor and capital

E

\$8 for labor; \$20 for capital