Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
marginal cost
B
average revenue
C
marginal revenue
D
total revenue
Understanding the Answer
Let's break down why this is correct
Answer
The Marginal Revenue Product of Labor (MRPL) helps businesses understand how much extra money they can make by hiring one more worker. To calculate MRPL, you need to multiply the price of the good or service being produced by the marginal product of labor, which is the additional output generated by that extra worker. For example, if a bakery sells each loaf of bread for $3 and a new baker adds 10 loaves to the daily output, the MRPL would be $3 multiplied by 10, which equals $30. This means that hiring this new baker could potentially bring in an extra $30 in revenue. Understanding MRPL helps businesses decide if hiring more workers is a good idea based on the additional income they can generate.
Detailed Explanation
Marginal revenue is the extra money earned from selling one more unit. Other options are incorrect because Some might think marginal cost, which is the cost of producing one more unit, is used; Average revenue is the total revenue divided by the number of units sold.
Key Concepts
Marginal Revenue Product of Labor
Marginal Revenue
Marginal Product of Labor
Topic
Marginal Revenue Product of Labor
Difficulty
easy level question
Cognitive Level
understand
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