If marginal revenue product is less than price of the input, the firm should use more of the input.

Name: If marginal revenue product is less than price of the input, the firm should use more of the input.
Brand: Quizplus
Rating: 4.9 (42 reviews)

Question

Quizplus · Accepted Answer

If marginal revenue product is less than the price of the input, it means that the additional revenue generated by using an additional unit of the input is less than the cost of that input. Therefore, the firm should not use more of the input as it would result in a reduction in profits.

If Marginal Revenue Product Is Less Than Price of the Input