Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Hiring More Capital
B
Increasing Wage Rates
C
Cost of Producing One More Unit
D
Revenue from Selling More Products
Understanding the Answer
Let's break down why this is correct
Answer
Marginal Revenue Product (MRP) refers to the additional revenue generated from hiring one more worker, while Marginal Cost (MC) is the additional cost incurred from hiring that worker. When a business considers hiring more employees, it looks at how much extra money those employees will bring in compared to how much it will cost to pay them. For example, if hiring a new worker increases sales by $1,000 (the MRP) but costs $800 in wages (the MC), the business sees a profit of $200. So, just as MRP helps to decide whether to hire more workers based on their revenue contribution, MC helps to determine if the cost of hiring is worth it. Understanding both concepts helps businesses make smart decisions about their workforce and overall profitability.
Detailed Explanation
Marginal cost is the extra cost of making one more item. Other options are incorrect because This answer confuses costs with investments; This option mixes up costs with pay.
Key Concepts
Marginal Revenue Product
Marginal Cost
Labor Economics
Topic
Marginal Revenue and Profit Calculations
Difficulty
easy level question
Cognitive Level
understand
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