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8 Feb 2020

What is meant by marginal revenue product? Why is the MRP curve of the factor is the firm's demand curve of the factor?

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Deanna Hettinger
Deanna HettingerLv2
8 Feb 2020

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Related questions

1. What is the marginal revenue product of labor (MRP)? What shape does the MRP curve have? Why?

2. What is a marginal factor cost? How is it related to the supply curve of an input?

The diagram below shows the MRP curve for a firm producing copper plumbing pipe. The factor of production being considered here is hours of labour. $ 16 Dollars $ 12 MRP2 MRP 1 MRP3 80 100 120 140 160 180 Units of labour FIGURE 13-2 39) Refer to Figure 13-2. Suppose this firm initially has the marginal revenue product curve MRP). One reason that the curve could shift to MRP3 is A) an increase in demand for the firm's output, copper plumbing pipe. B) a decrease in the market price of copper plumbing pipe. C) a decrease in the supply of labour. D) an increase in the wage rate. E) an increase in the marginal product of labour.

Assume that the product price is $2 per unit, the price of thefactor of production is $40 per unit, and 8 units are being hired.Profit can be maximized by hiring _______ unit(s).
Answer
A. 2 more
B. 1 more
C. 1 fewer
D. 3 fewer

If a firm is using a factor of production from a perfectlycompetitive market such that MFC > MRP, then profit:
Answer
A. can be increased by decreasing the factor price.
B. is maximized.
C. can be increased by using more of the factor.
D. can be increased by using less of the factor.

The amount a factor adds to a firm's total cost per period iscalled:
Answer
A. marginal factor cost.
B. marginal fixed cost.
C. marginal cost.
D. MFR .

Which of the following statements is true?
Answer
A. Marginal product is the change in total revenue divided by a oneunit change in a factor.
B. Marginal factor cost is equal to average total cost.
C. Marginal revenue product is marginal product times marginalrevenue.
D. Marginal revenue is the change in total output divided by thechange in output

Given an increase in the demand for labor, the more the supply oflabor rises:
Answer
A. the fewer the number of workers employed.
B. the greater the increase in wages.
C. the greater the increase in workers employed at the originalwage rate.
D. the less the increase in wages and the greater the number ofworkers employed.

Which of the following statements is true?
Answer
A. The market demand curve for labor is found by adding the supplycurves for labor of individual firms.
B. The market demand for labor will change as a result of a changein the use of a complementary factor or a substitute factor.
C. The market demand curve for labor is vertical at theprofit-maximizing wage.
D. A firm's demand for labor is the upward-sloping portion of theMRP curve for labor.

If marginal product is _______ , marginal revenue product must be_______ .
Answer
A. rising; falling
B. rising; zero
C. falling; rising
D. falling; falling

If a firm is using a factor of production from a perfectlycompetitive market such that MFC < MRP, then profit:
Answer
A. can be increased by using more of the factor.
B. can be increased by increasing the factor price.
C. is maximized.
D. can be increased by using less of the factor.

Which of the following statements is true?
Answer
A. Leisure is a normal good.
B. The demand for leisure is perfectly inelastic.
C. All other things unchanged, an increase in income will decreasethe demand for leisure.
D. Leisure is an inferior good.

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