Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
MRP increases with technological advancements, leading firms to hire more workers as productivity rises.
B
MRP decreases with technological advancements, making firms less likely to hire.
C
MRP remains constant regardless of changes in technology and productivity.
D
MRP only affects hiring decisions in non-competitive labor markets.
Understanding the Answer
Let's break down why this is correct
Answer
In a competitive labor market, the marginal revenue product (MRP) of labor refers to the additional revenue a firm earns from hiring one more worker. When there are technological advancements, they often increase the productivity of workers, meaning each worker can produce more goods or services. This increase in productivity raises the MRP, making it more profitable for firms to hire additional workers. For example, if a factory introduces a new machine that helps workers produce 10 more items per hour, the factory's MRP increases, encouraging them to hire more workers to maximize profits. Therefore, firms will consider both the MRP and the effects of technology on productivity when deciding how many workers to hire.
Detailed Explanation
When technology improves, workers can produce more. Other options are incorrect because Some might think that better technology makes hiring less important; It's a common mistake to think MRP doesn't change with technology.
Key Concepts
Technology and Productivity
Cost-Benefit Analysis
Competitive Labor Market
Topic
Marginal Revenue Product Analysis
Difficulty
hard level question
Cognitive Level
understand
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