The marginal productivity principle implies that
A)quantity demanded of an input normally declines as the input price falls.
B)at equilibrium, profit from the last unit of input will be zero.
C)for maximizing profit, marginal revenue product should be greater than price.
D)marginal productivity of inputs increase when price of inputs increase.

Question

Quizplus · Accepted Answer

The marginal productivity principle implies that for maximizing profit, the marginal revenue product (MRP) of an input should be equal to its price. At equilibrium, this means the profit from the last unit of input (marginal profit) will be zero, because the cost of the input equals the revenue it generates.

The Marginal Productivity Principle Implies That