Resources provide value and resources incur costs. Firms have to choose how to use various factors of production to make products. To keep costs low, we have to be able to compare the productivity of different resources in making products. By making use of the most productive resources, firms can be efficient, responsible, and profitable. COSTS AND REVENUES The revenue a resource earns for a firm is the marginal revenue product or MRP. The cost to a firm for using that resource is the marginal resource cost or MRC. Based on relative costs and revenues, a firm will want to increase or decrease their use of the resource. This happens in a few different ways. In the following questions, we'll be looking at how firms use capital and labor. Example Question Give an example of a firm that should increase its use of capital and decrease its use of labor. Example Answer Labor: \$8MRP - \$15MRC Capital: \$8MRP - \$4MRC 1.) Give an example of a firm that should maintain its use of capital but increase its use of labor. 2.) Give an example of a firm that should has minimized costs but not maximized profits. 3.) Give an example of a firm that has maximized profits. 4.) Give an example of a firm that should decrease its use of both capital and labor. 5.) For your example in question 2 , what is the most the company would be able to pay its employees?