In a purely competitive industry,which of the following could cause a firm's marginal revenue product for an economic resource to increase?
A) An increase in demand for the firm's product
B) A reduction in the price of the resource
C) An increase in the elasticity of the firm's supply curve
D) A decrease in the price of the product produced by the resource

Question

Quizplus · Accepted Answer

An increase in demand for the firm's product would cause the equilibrium price of the product to increase. This would increase the marginal revenue product of the economic resource used in production, as the firm can now sell more units of the product at a higher price, leading to higher revenues and a higher demand for the economic resource.

In a Purely Competitive Industry,which of the Following Could Cause