The marginal revenue product of an input in a competitive market decreases as a firm increases the quantity of the input employed because of the
A)law of diminishing returns.
B)law of diminishing marginal utility.
C)homogeneity of the product.
D)free mobility of resources.

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more of an input is employed in production, holding other inputs constant, the additional output produced from each additional unit of input will eventually decrease. This principle explains why the marginal revenue product of an input decreases as its quantity increases.

The Marginal Revenue Product of an Input in a Competitive