The marginal revenue product of an economic resource for a firm operating in purely competitive product and resource markets
A) is the marginal product of the resource divided by the price of the final product.
B) is the increase in total revenue resulting from the addition of one more unit of the resource.
C) is equal to the average revenue product at the lowest point of the average revenue product curve.
D) decreases as the quantity of output decreases.

Question

Quizplus · Accepted Answer

The marginal revenue product (MRP) of an economic resource in a purely competitive market is the increase in total revenue resulting from the addition of one more unit of the resource. This is because in a competitive market, the price of the final product and the price of the resource are both determined by market forces, and the firm is a price-taker. Therefore, the MRP is equal to the marginal product of the resource multiplied by the price of the final product.

The Marginal Revenue Product of an Economic Resource for a Firm