If a productʹs demand increases as its supply simultaneously decreases, the marginal revenue product curve will
A) shift to the right.
B) shift to the left.
C) remain unchanged.
D) either shift to the left, shift to the right, or remain unchanged depending upon what happens to product price.

Question

Quizplus · Accepted Answer

When demand for a product increases while its supply decreases, the price of the product typically rises. This increase in price leads to an increase in the marginal revenue product, which is the additional revenue generated by employing one more unit of a factor of production. As a result, the marginal revenue product curve shifts to the right, reflecting the higher value of the additional output produced.

If a Productʹs Demand Increases as Its Supply Simultaneously Decreases