Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It always increases MRP due to more output.
B
It may decrease MRP if marginal product declines.
C
It has no effect on MRP regardless of output.
D
It only affects MRP if wages change.
Understanding the Answer
Let's break down why this is correct
Answer
Marginal Revenue Product (MRP) is the additional revenue generated by employing one more worker. When you increase the number of workers, the MRP can change depending on how productive each worker is. Initially, adding more workers might lead to higher MRP because tasks can be completed faster or more efficiently. However, if too many workers are added, they might get in each other's way, leading to a decrease in productivity and thus a lower MRP. For example, if a factory hires one additional worker and they produce 10 more widgets, the MRP is high, but if the factory hires too many workers, they might only produce 2 more widgets, which shows how MRP can decrease with overstaffing.
Detailed Explanation
Adding more workers can lead to less extra output from each worker. Other options are incorrect because Some people think more workers always mean more output; It's a common belief that the number of workers doesn't change MRP.
Key Concepts
Marginal Revenue Product
Marginal Product of Labor
Marginal Revenue
Topic
Calculating Marginal Revenue Product
Difficulty
easy level question
Cognitive Level
understand
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