Practice Questions
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What happens to the marginal revenue product of labor as more units of labor are added, assuming diminishing returns?
As you hire more workers, each new worker adds less value than the one before. Other options are incorrect because Some might think that adding worker...
In a competitive market, how does the Marginal Revenue Product of Labor (MRP) help determine the optimal number of workers a firm should hire?
Firms should hire workers until the extra money they make from one more worker equals what they pay that worker. Other options are incorrect because S...
What is the relationship between marginal revenue and the marginal revenue product of labor when hiring additional workers?
When you hire more workers, the extra money you make from selling more products can increase. Other options are incorrect because This suggests that a...
In a competitive labor market, how does the marginal revenue product of labor (MRP) influence a firm's decision to hire additional workers, considering input factor relationships and cost-benefit analysis?
Firms will hire more workers if the money they make from each worker is greater than what they pay them. Other options are incorrect because Some thin...
In a perfectly competitive labor market, if the marginal product of labor increases while the output price remains constant, what will happen to the marginal revenue product of labor?
When the marginal product of labor goes up, it means each worker is producing more. Other options are incorrect because Some might think that more out...
What does the marginal revenue product of labor represent in economics?
This term means the extra money a company makes when they hire one more worker. Other options are incorrect because This option suggests that we just ...
What is the Marginal Revenue Product of Labor (MRP) when the marginal product of labor is 5 units and the price of the product is $10?
To find the MRP, you multiply the marginal product by the price. Other options are incorrect because This answer might come from thinking the price is...
What does the Marginal Revenue Product of Labor (MRP) indicate in the context of labor demand?
The Marginal Revenue Product of Labor shows how much extra money a company makes when it hires one more worker. Other options are incorrect because So...
Which of the following statements accurately describe the Marginal Revenue Product of Labor (MRPL)? Select all that apply.
Other options are incorrect because This statement suggests that MRPL is simply the extra money from one more worker; This option implies that MRPL an...
A bakery owner is considering hiring a new baker. Currently, the bakery produces 100 loaves of bread with 2 bakers, generating $500 in revenue. If hiring a third baker increases production by 30 loaves and the marginal revenue of each loaf remains $5, what should the owner consider regarding the Marginal Revenue Product of Labor (MRPL) before making the hiring decision?
The MRPL shows how much extra money each new baker brings in. Other options are incorrect because This idea assumes that more workers always mean more...
Marginal Revenue Product of Labor (MRPL) : Optimal Hiring Level :: Marginal Cost : ?
Profit maximization happens when a business hires workers until the cost of hiring equals the extra money made. Other options are incorrect because Mi...
The Marginal Revenue Product of Labor (MRPL) is calculated as the product of _____ and the marginal product of labor.
Marginal revenue is the extra money earned from selling one more unit. Other options are incorrect because Some might think marginal cost, which is th...
If a company finds that the Marginal Revenue Product of Labor is decreasing, what does it imply about their hiring strategy?
When the Marginal Revenue Product of Labor decreases, it means each new worker adds less to total revenue. Other options are incorrect because Some mi...
A firm is evaluating the impact of hiring an additional worker. Which of the following scenarios best illustrates the concept of Marginal Revenue Product of Labor (MRPL)?
This option shows how hiring one more worker increases total revenue by $500. Other options are incorrect because This option suggests that hiring mor...
Order the steps a firm should take to determine its optimal level of labor hiring using the Marginal Revenue Product of Labor.
First, a firm needs to find out how much extra output each new worker can produce. Other options are incorrect because Some might think they should fi...
If a firm experiences an increase in its marginal revenue product of labor, what is the most likely underlying reason for this change?
When a firm sells its product for a higher price, it earns more money for each item sold. Other options are incorrect because If the productivity of w...
How does an increase in the marginal revenue product of labor affect a firm's hiring decisions in a competitive market?
When the marginal revenue product of labor (MRPL) goes up, it means each worker brings in more money. Other options are incorrect because This answer ...
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