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

Question

Quizplus · Accepted Answer

Marginal revenue product measures the additional revenue that is generated by one additional unit of a factor (such as labor or capital) when all other factors are held constant. It is calculated as the product of the marginal physical product (MPP) of the factor and the marginal revenue (MR) from the output produced by that factor: MRP = MPP x MR.

The Amount by Which an Additional Unit of a Factor