The amount by which the use of an additional unit of a factor of production increases a firm's total revenue during a period is called the:
A)value of the marginal product.
B)average product.
C)marginal factor cost.
D)marginal physical product.

Question

Quizplus · Accepted Answer

The value of the marginal product (VMP) is the increase in a firm's total revenue resulting from the use of an additional unit of a factor of production. Marginal physical product (MPP) refers to the increase in output resulting from the use of an additional unit of a factor of production, while marginal factor cost (MFC) is the additional cost incurred by the firm when it hires an additional unit of a factor of production. Average product (AP) refers to the average output per unit of a factor of production used. Therefore, the correct choice is A) value of the marginal product.

The Amount by Which the Use of an Additional Unit