If a firm is a perfect competitor in its product market,the marginal product of a factor multiplied by the product's price equals
A)marginal cost.
B)marginal profit.
C)total revenue.
D)marginal revenue.
E)marginal revenue product.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price taker, meaning it cannot influence the product's price. Thus, the additional revenue generated by hiring one more unit of the factor is equal to the product's price multiplied by the marginal product of that factor. This is called the marginal revenue product (MRP). Therefore, the correct answer is (E) marginal revenue product.

If a Firm Is a Perfect Competitor in Its Product