Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
MRPL helps firms decide the optimal number of workers to hire.
B
Hiring more workers always increases total revenue.
C
MRPL decreases as more workers are hired due to the law of diminishing returns.
D
MRPL is the additional revenue generated from hiring one more worker.
E
MRPL is unaffected by changes in market demand.
Understanding the Answer
Let's break down why this is correct
Answer
The Marginal Revenue Product of Labor (MRPL) is an important concept in understanding how much extra money a company makes from hiring one more worker. It measures the additional revenue generated by the last worker hired, taking into account how productive that worker is. For example, if a company hires one more employee and that worker helps produce items that bring in $100 more in sales, the MRPL for that worker would be $100. This helps businesses decide whether to hire more workers based on whether the revenue from their work exceeds their wages. Overall, MRPL is crucial because it shows the relationship between labor input and the financial output of a company.
Detailed Explanation
Other options are incorrect because Some might think MRPL helps decide how many workers to hire; It's a common belief that hiring more workers always boosts revenue.
Key Concepts
Marginal Revenue Product of Labor
Labor Supply and Demand
Economic Efficiency
Topic
Labor Productivity and Decision-Making
Difficulty
easy level question
Cognitive Level
understand
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