Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Rental Price
B
Total Revenue
C
Fixed Costs
D
Variable Costs
Understanding the Answer
Let's break down why this is correct
Answer
The marginal product of labor refers to the additional output produced when one more worker is added to a production process, and this is often compared to the wage paid to that worker. Similarly, the marginal product of capital is the extra output generated when one more unit of capital, like machinery or equipment, is used in production. To complete the analogy, you would compare the marginal product of capital to the cost of using that capital, such as rental fees or depreciation. For example, if a company invests in a new machine that increases production by 100 units and costs $10,000, the marginal product of capital is 100 units, and it should be compared to the cost of that machine to evaluate its effectiveness. This helps businesses decide if the investment in capital is worth it based on how much extra output it generates.
Detailed Explanation
The marginal product of capital shows how much extra output we get from using one more unit of capital. Other options are incorrect because Total revenue is the money a business makes from selling goods; Fixed costs are expenses that don't change, like rent for a building.
Key Concepts
Marginal Product Analysis
Resource Allocation
Cost Minimization
Topic
Marginal Product Analysis
Difficulty
hard level question
Cognitive Level
understand
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