Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The wage rate firms are willing to pay
B
The total output produced by all workers
C
The cost of hiring each additional worker
D
The demand for goods produced by labor
Understanding the Answer
Let's break down why this is correct
Answer
Labor supply refers to the total number of workers who are willing and able to work at a given wage. Similarly, the marginal revenue product of labor (MRPL) represents the additional revenue that a business earns from hiring one more worker. This means that MRPL is related to the value of the output produced by that extra worker. For example, if a company hires a new employee who helps produce more goods that generate $100 in sales, the MRPL for that worker is $100. So, just as labor supply indicates the availability of workers, MRPL shows the economic value that each worker brings to a business.
Detailed Explanation
The MRPL shows how much money a worker can make for a company. Other options are incorrect because Some might think MRPL is about total output, but it focuses on the value of one worker's contribution; This option confuses cost with value.
Key Concepts
Labor Supply and Demand
Marginal Revenue Product of Labor
Equilibrium wage rate
Topic
Labor Supply and Demand Graphing
Difficulty
medium level question
Cognitive Level
understand
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