Multiple Choice
In the context of the production function and marginal revenue product, which of the following is an example of derived demand?
15. Markets for the Factors of Production
The Production Function and Marginal Revenue Product
Struggling with Microeconomics?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The marginal revenue product of labor is the:
A
wage paid to each worker
B
additional revenue generated from employing one more unit of labor
C
additional output produced by one more unit of labor
D
total revenue divided by the number of workers employed
Verified step by step guidance1
Understand the concept of Marginal Revenue Product of Labor (MRP_L), which measures the additional revenue a firm earns by employing one more unit of labor.
Recall that MRP_L is calculated as the product of the Marginal Product of Labor (MPL) and the Marginal Revenue (MR) from selling the additional output produced by that labor.
Express this relationship mathematically as: \(\text{MRP}_L = \text{MPL} \times \text{MR}\), where MPL is the additional output from one more worker and MR is the additional revenue from selling one more unit of output.
Recognize that the wage paid to each worker is the cost of employing labor, not the revenue generated, so it is different from MRP_L.
Conclude that the Marginal Revenue Product of Labor represents the additional revenue generated from employing one more unit of labor, which aligns with the correct answer.
2:41mWatch next
Master The Factors of Production with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
The Production Function and Marginal Revenue Product practice set
Problem sets built by lead tutorsExpert video explanations