If product price increases, then:

Question

Quizplus · Accepted Answer

When product price increases, the marginal revenue product (MRP) of the factor of production used to produce that product increases. This is because the higher price of the product means that each unit of the factor of production used to produce that product can generate more revenue. Therefore, MRP will increase. Neither MP nor MFC are necessarily affected by a change in product price, so options A and B can be eliminated. Option D is incorrect as it suggests that MP will decrease, which is not necessarily true.

If Product Price Increases, Then