Multiple Choice
The monopolistically competitive seller maximizes profit by producing at the point where:
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0. Basic Principles of Economics
Marginal Analysis
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The marginal product of a factor shows how much an additional unit of that factor adds to:
A
marginal revenue
B
total cost
C
average cost
D
total output
Verified step by step guidance1
Understand the definition of the marginal product (MP) of a factor: it measures the additional output produced by using one more unit of that input, holding other inputs constant.
Recall that marginal product relates to output, not directly to revenue or costs. It tells us how total output changes when the input quantity changes by one unit.
Marginal revenue refers to the additional revenue from selling one more unit of output, which is different from marginal product since it involves price and output sold.
Total cost and average cost relate to expenses of production, not the physical quantity of output produced by an additional input unit.
Therefore, the marginal product of a factor specifically shows the change in total output resulting from an additional unit of that factor.
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