The amount that an additional unit of a factor adds to a firm's total revenue is called the:
A)marginal revenue.
B)marginal cost.
C)additional revenue product.
D)value of the marginal product.

Question

Quizplus · Accepted Answer

The value of the marginal product measures how much an additional unit of a factor of production (such as labor) contributes to a firm's total revenue. It is calculated by multiplying the marginal product of the factor (how much output increases with each additional unit of the factor) by the price of the firm's output. Therefore, D is the correct answer. Marginal revenue (A) refers to the change in total revenue from producing one additional unit of output and is not directly related to the value of a factor of production. Marginal cost (B) refers to the additional cost of producing one additional unit of output and is also not directly related to the value of a factor of production. Additional revenue product (C) is not a commonly used economic term.

The Amount That an Additional Unit of a Factor Adds