Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Total Revenue
B
Total Product
C
Marginal Cost
D
Average Product
Understanding the Answer
Let's break down why this is correct
Answer
To understand the relationship between marginal revenue product and marginal revenue, we first need to define what these terms mean. Marginal revenue product of labor refers to the additional revenue generated from hiring one more worker, while marginal revenue is the extra income earned from selling one more unit of a product. The missing term in your analogy is "marginal product of labor," which is the extra output produced by that additional worker. For example, if hiring one more worker increases production by 10 units and each unit sells for $5, the marginal revenue product would be $50. Thus, the relationship shows how the output from labor translates into revenue for the business.
Detailed Explanation
The Marginal Revenue Product shows how much extra money a worker brings in. Other options are incorrect because Total Revenue is the overall money earned, not directly tied to how much one more worker adds; Marginal Cost is about how much it costs to produce one more item.
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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