Scenario 14.1
A worker in Firm A earns an income of $5,000 per month. He has been offered a job in Firm B where he will be paid a salary of $7,000 per month.
-For a perfectly competitive firm, the marginal revenue product is equal to the marginal product multiplied by the output price.

Question

Quizplus · Accepted Answer

This statement is true. In a perfectly competitive market, the marginal revenue product measures the change in total revenue resulting from an additional unit of labor. It is equal to the product of the marginal product of labor (MPL) and the market price of the output. Therefore, MRPL = MPL x Price of Output.

Scenario 14.1 A Worker in Firm a Earns an Income of $5,000