For a firm operating in a perfectly competitive output market, if MP is rising, MRP must be falling.

Question

Quizplus · Accepted Answer

If MP is rising, it means that marginal product (the additional output produced by adding one more unit of input) is increasing. This would lead to an increase in the marginal revenue product (MRP), which is the change in total revenue resulting from one additional unit of input. Therefore, if MP is rising, MRP should also be rising, not falling.

For a Firm Operating in a Perfectly Competitive Output Market