All else equal, if the price of the good that a firm produces decreases, then the marginal revenue product of workers will _____, and the firms will hire _____ workers.
A) increase; more
B) increase; fewer
C) decrease; more
D) decrease; fewer

Question

Quizplus · Accepted Answer

The marginal revenue product of workers decreases because it is directly related to the price of the good produced. If the price decreases, the additional revenue generated by hiring an extra worker also decreases. Consequently, firms will hire fewer workers because the benefit (additional revenue) from hiring an extra worker has diminished.

All Else Equal, If the Price of the Good That