If product demand increases and product price increases
A) the marginal revenue product curve will shift to the right.
B) the marginal revenue product curve will shift to the left.
C) the firm will move up the marginal revenue product curve and hire fewer units of the input.
D) the firm will move down the marginal revenue product curve and hire more units of the input.

Question

Quizplus · Accepted Answer

When product demand increases and product price increases, the value of the additional output produced by an additional unit of input (marginal revenue product) increases. This leads to a rightward shift in the marginal revenue product curve, indicating that each unit of input is now more valuable to the firm.

If Product Demand Increases and Product Price Increases