Assume a firm has allocated it given resource budget between labor and capital and finds the marginal physical product for the resources to be 200 units from labor and 400 units from capital. That means the last unit of labor increased total output by 200 units while the last unit of capital increased output by 400 units. At first glance, you might think the firm should move some money away from labor and over to capital. But that would totally ignore the prices of the two resources. Assume the prices of labor and capital in competitive resource markets are and $10 and $40, respectively.