Which of the following is correct?
A) MRP = MC x MR.
B) MRP = MP x MR.
C) MP = MRP x MR.
D) MRP/ MC = TR.

Question

Quizplus · Accepted Answer

MRP stands for marginal revenue product which is the additional revenue generated by hiring one additional unit of labor. MP stands for marginal product which is the additional unit of output produced by hiring one additional unit of labor. MR stands for marginal revenue which is the additional revenue generated by selling one additional unit of output. Therefore, MRP = MP x MR. Option A is incorrect because MC (marginal cost) is not directly related to MRP. Option C is incorrect because MP cannot be equal to MRP x MR. Option D is incorrect as there is no direct relation between MRP/MC and TR (total revenue).

Which of the Following Is Correct