Learning Path
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Understand Question2
Review Options3
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A
A → D → B → C
B
D → A → C → B
C
A → B → D → C
D
B → A → C → D
Understanding the Answer
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Answer
To calculate the Marginal Revenue Product (MRP), you start by identifying the marginal product of labor, which tells you how much additional output one more worker can produce. Next, you determine the marginal revenue from the output produced, as this shows how much extra money each unit of output brings in. After that, you multiply the marginal product of labor by this marginal revenue to get the MRP, which shows the value added by hiring an extra worker. Finally, you compare the calculated MRP with marginal factor costs to decide if hiring more workers is worthwhile. For example, if one more worker produces 10 extra units and each unit sells for $5, the MRP would be $50, which you would then compare to the cost of hiring that worker.
Detailed Explanation
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 knowing the output; This option suggests comparing costs before calculating MRP.
Key Concepts
Marginal Revenue Product
Marginal Product of Labor
Marginal Revenue
Topic
Calculating Marginal Revenue Product
Difficulty
medium level question
Cognitive Level
understand
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