Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
MRPL is the additional revenue generated from hiring one more worker.
B
MRPL is always equal to the wage paid to the worker.
C
MRPL decreases as more workers are hired due to diminishing marginal returns.
D
MRPL helps firms determine the optimal number of employees to maximize profits.
E
MRPL is calculated by multiplying the marginal product of labor by the marginal cost of labor.
Understanding the Answer
Let's break down why this is correct
Answer
The Marginal Revenue Product of Labor (MRPL) is the additional revenue a company earns by hiring one more worker. It reflects how much extra money a business makes when it increases its workforce. For example, if a bakery hires an extra baker who produces enough bread to bring in $200 more in sales, that $200 represents the MRPL for that baker. Understanding MRPL helps businesses decide how many workers to hire, as they want to ensure that the revenue from each new worker exceeds their cost. Therefore, if the MRPL is greater than the wage paid to the worker, it makes financial sense for the business to hire more staff.
Detailed Explanation
Other options are incorrect because This statement suggests that MRPL is simply the extra money from one more worker; This option implies that MRPL and the worker's wage are always the same.
Key Concepts
Marginal Revenue Product of Labor
Marginal Product of Labor
Diminishing Returns
Topic
Marginal Revenue Product of Labor
Difficulty
easy level question
Cognitive Level
understand
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