For a firm that is a price taker in the market for labour, the marginal revenue product of labour equals the
A)marginal product of labour multiplied by the wage rate.
B)marginal product of labour multiplied by the product price.
C)marginal product of labour divided by the wage rate.
D)marginal product of labour multiplied by the marginal cost of production.

Question

Quizplus · Accepted Answer

For a firm that is a price taker, it cannot influence the wage rate, so the marginal revenue product of labour (MRPL) simply equals the marginal product of labour (MPL) multiplied by the product price (P): MRPL = MPL * P. Therefore, choice B is the correct answer. A is incorrect because it multiplies MPL with the wage rate instead of the product price. C is incorrect because it divides MPL by the wage rate instead of multiplying it by the product price. D is incorrect because it multiplies MPL with the marginal cost of production, which is not related to the output price or the revenue earned by the firm.

For a Firm That Is a Price Taker in the Market