Practice Questions
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If a firm increases the price of its product, how is the marginal revenue product affected, assuming the output remains constant?
When a firm raises the price, it earns more money for each unit sold. Other options are incorrect because Some might think that raising the price lowe...
If a firm increases its employment levels, how does this typically affect the marginal revenue product of labor, according to the labor demand curve?
When a firm hires more workers, each new worker adds less to total output. Other options are incorrect because Some might think more workers always me...
In a firm, if the marginal product of labor (MPL) is 20 units and the price of the product is $5, what is the marginal revenue product of labor (MRPL)?
To find the MRPL, multiply the MPL by the price. Other options are incorrect because This answer might come from confusing the numbers; This could hap...
If a firm employs additional workers and observes that the marginal revenue product of labor decreases as output increases, which of the following scenarios best explains this phenomenon?
As more workers are added, each worker contributes less to total output. Other options are incorrect because Some might think that keeping the product...
A firm is considering hiring additional workers to increase production. If the price of the output is $20 per unit and the marginal revenue product of the additional worker is $100, how many additional units does the firm need to produce to justify hiring this worker?
To justify hiring a worker, the firm needs to produce enough units to cover the worker's value. Other options are incorrect because This answer sugges...
What does the Marginal Revenue Product (MRP) measure in economics?
MRP shows how much extra money a business makes when it hires one more worker. Other options are incorrect because This option confuses total revenue ...
If a firm hires an additional worker and the Marginal Product of Labor (MPL) for that worker is 10 units of output, what is the Marginal Revenue Product (MRP) if the price of the product is $5?
The Marginal Revenue Product is found by multiplying the MPL by the price. Other options are incorrect because This answer might come from thinking on...
If a firm sells its output at a price of $10 per unit and the marginal product of labor is 5 units per hour, what is the marginal revenue product of labor?
The marginal revenue product of labor is found by multiplying the price per unit by the marginal product of labor. Other options are incorrect because...
To determine how much additional revenue a firm gains from employing one more worker, it is essential to calculate the __________, which is the product of the marginal product of labor and the marginal revenue of the output produced.
This term shows how much extra money a company makes from hiring one more worker. Other options are incorrect because Total revenue is the overall mon...
Arrange the following steps in the correct order for calculating the Marginal Revenue Product (MRP): A) Identify the marginal product of labor, B) Multiply the marginal product of labor by the marginal revenue from output, C) Compare the calculated MRP with marginal factor costs, D) Determine the marginal revenue from the output produced.
First, you find out how much extra output one more worker can produce. Other options are incorrect because This option starts with the revenue before ...
A bakery employs 5 workers who each produce 10 loaves of bread per hour. If the sale price per loaf is $2, what is the marginal revenue product of hiring a 6th worker, assuming that each additional worker also produces 10 loaves per hour? How should the bakery use this information to decide on hiring the additional worker?
The marginal revenue product (MRP) is $20. Other options are incorrect because This answer suggests the MRP is $10, which is incorrect; This option cl...
If a firm observes that hiring an additional worker leads to a significant increase in total revenue, which of the following best explains this effect?
When a firm hires more workers, each worker can produce more goods. Other options are incorrect because This answer suggests that lower wages allow mo...
How does increasing the number of workers affect marginal revenue product (MRP)?
Adding more workers can lead to less extra output from each worker. Other options are incorrect because Some people think more workers always mean mor...
Which of the following statements correctly describe the implications of calculating the Marginal Revenue Product (MRP) in a competitive labor market? Select all that apply.
All the statements provided misunderstand how MRP works in relation to hiring and productivity. Other options are incorrect because This suggests that...
Marginal Revenue Product : Marginal Product of Labor :: ? : Marginal Revenue
The Marginal Revenue Product shows how much extra money a worker brings in. Other options are incorrect because Total Revenue is the overall money ear...
If a company hires an additional worker who increases output by 10 units and the marginal revenue per unit is $5, what is the marginal revenue product of that worker?
The marginal revenue product is found by multiplying the extra output by the revenue per unit. Other options are incorrect because This answer might c...
A company has determined that hiring an additional worker increases its total output by 10 units, and the marginal revenue of each unit sold is $5. Based on this information, which category does this situation best fit in regarding hiring decisions?
The extra worker adds 10 units. Other options are incorrect because This suggests the extra worker doesn't help; This assumes that more output isn't n...
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