Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Total cost
B
Average revenue
C
Profit
D
Demand curve
Understanding the Answer
Let's break down why this is correct
Answer
Marginal revenue product (MRP) is the additional revenue a company earns from hiring one more unit of labor, while marginal factor cost (MFC) is the cost of hiring that additional unit. The relationship between MRP and MFC helps businesses decide how many workers to hire. Similarly, total revenue refers to the overall income a company generates from selling goods or services, which can be compared to total cost, the overall expenses incurred in running the business. For example, if a bakery makes $100 from selling cakes, that is its total revenue, while its total costs might be $60 for ingredients and labor. Just as MRP helps determine the optimal number of workers, understanding total revenue in relation to total cost helps businesses assess profitability.
Detailed Explanation
Total revenue is the money a business makes from selling goods. Other options are incorrect because Average revenue is the revenue per unit sold; Profit is what remains after costs are subtracted from revenue.
Key Concepts
Marginal Revenue Product (MRP)
Marginal Factor Cost (MFC)
Total Revenue
Topic
Labor Market Dynamics
Difficulty
hard level question
Cognitive Level
understand
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