An increase in the productivity of a factor of production will
A) shift its marginal revenue product curve to the right.
B) shift its marginal revenue product curve to the left.
C) cause a firm to move down the marginal revenue product curve.
D) cause a firm to move up the marginal revenue product curve.

Question

Quizplus · Accepted Answer

An increase in the productivity of a factor of production makes it more valuable to a firm, as it can produce more output with the same amount of input. This increases the marginal revenue product (MRP) of the factor, shifting its MRP curve to the right, reflecting the higher value of its productivity.

An Increase in the Productivity of a Factor of Production