In competitive markets,the marginal revenue product curve and marginal physical product curve have similar shapes because
A)The demand curve for the product slopes downward in accordance with the law of diminishing returns.
B)MRP = P × MPP.
C)The law of diminishing marginal utility and the law of diminishing returns imply a downward-sloping demand curve in the product market.
D)The demand curve for labor is the same for both the individual firm and the market as a whole.

Question

Quizplus · Accepted Answer

The marginal revenue product (MRP) curve and the marginal physical product (MPP) curve have similar shapes because MRP is calculated as the product price (P) multiplied by MPP. Both curves will therefore exhibit the law of diminishing returns, which states that as additional units of input (such as labor) are added, the marginal physical product will eventually decrease. This leads to a downward slope in both curves. The other choices are not directly related to the similarity in shape between the MRP and MPP curves.

In Competitive Markets,the Marginal Revenue Product Curve and Marginal Physical