Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The additional revenue generated from hiring one more worker
B
The total cost of employing workers
C
The average wage paid to employees
D
The profit margin of a business
Understanding the Answer
Let's break down why this is correct
Answer
The Marginal Revenue Product of Labor, or MRP, helps businesses understand how much additional money they can make by hiring one more worker. It measures the extra revenue generated from the last worker hired, taking into account how much that worker can produce and the price of what they produce. For example, if a bakery hires a new baker who can make 20 loaves of bread a day, and each loaf sells for $2, the MRP of that baker would be $40 (20 loaves times $2). If the bakery finds that the cost of hiring that baker is lower than the MRP, it makes sense to hire them because they will increase profits. Therefore, MRP is crucial for businesses to decide how many workers to hire based on their potential contribution to revenue.
Detailed Explanation
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 Some might think this measures total costs; This option suggests MRP is about average wages.
Key Concepts
labor demand
Topic
Marginal Revenue Product of Labor
Difficulty
easy level question
Cognitive Level
understand
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