Which of the following best explains the decline in marginal revenue product (MRP) ?
A) As more and more of a variable factor (ex: Labor) is added to a fixed factor (ex: capital) , total product become smaller and smaller.
B) As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital) , marginal product become smaller and smaller as defined by the law of diminishing returns.
C) As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital) , marginal utility becomes smaller and smaller.
D) As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital) , marginal revenue product (MRP) become larger and larger.
Correct Answer:
Verified
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