If marginal product is _______ , marginal revenue product must be _______ .
A) rising; falling
B) falling; falling
C) falling; rising
D) rising; zero

Question

Quizplus · Accepted Answer

Marginal revenue product (MRP) is the additional revenue generated from employing an additional unit of a resource, calculated as the marginal product (MP) of the resource times the marginal revenue (MR) generated from selling the additional output produced by that resource. If the marginal product is falling, it means each additional unit of input produces less output than the previous unit. Assuming the price of the output (and thus marginal revenue) is constant or falling, the marginal revenue product must also be falling because it is the product of a decreasing marginal product and a constant or decreasing marginal revenue.

If Marginal Product Is _______ , Marginal Revenue Product Must