If capital and labor are complementary inputs and the firm increases the amount of capital employed in production, the marginal revenue product of labor will
A) decrease.
B) increase.
C) remain constant because the amount of labor was not changed.
D) either increase, decrease or remain constant depending on how complementary labor and capital are in production.

Question

Quizplus · Accepted Answer

When the firm increases the amount of capital employed in production, the productivity of labor also increases. As a result, the marginal revenue product of labor will increase because each worker is now producing more output.

If Capital and Labor Are Complementary Inputs and the Firm