Which of the following is the best definition of the marginal revenue product (MRP)of a factor of production?
A)the average product of the factor multiplied by the price of the output
B)the change in revenue generated by the sale of the product produced by an additional unit of input
C)the change in revenue caused by the sale of an additional unit of output
D)the increase in output resulting from the use of an additional unit of the factor multiplied by the cost of that factor
E)marginal revenue multiplied by total product

Question

Quizplus · Accepted Answer

Marginal revenue product (MRP) is the change in revenue generated by the sale of the product produced by an additional unit of input. This means that MRP measures the contribution of one additional unit of a factor of production to the total revenue earned by the firm. Option A is incorrect because MRP does not factor in the price of output, only the change in revenue. Option C is incorrect because it refers to marginal revenue, not MRP. Option D is incorrect because it calculates the increase in output, not the change in revenue. Option E is incorrect because it multiplies marginal revenue by total product, which is not the definition of MRP.

Which of the Following Is the Best Definition of the Marginal