The Marginal Revenue Product of a Resource

question 132

Multiple Choice

The marginal revenue product of a resource

• A) is defined as the marginal product of the resource multiplied by the resource price.
• B) simply means that a firm should add to its capital stock as long as competition requires it.
• C) equals the extra output produced by an additional unit of the resource multiplied by the marginal revenue per unit of that output.
• D) equals the average product of the resource multiplied by the cost of hiring an additional (marginal) unit of the resource.

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Definitions:

Prices and Wages

Refers to the levels of remuneration for labor and the cost of goods and services in an economy, which can impact inflation and purchasing power.

Natural Rate

The rate of a quantity, such as unemployment or interest, that prevails when the economy is in a long-term equilibrium.

Classical Dichotomy

The theoretical separation of nominal and real variables in classical economics, suggesting that changes in the money supply only affect nominal variables.

Inflation Rate

An upward movement in the overall price level of goods and services in an economy over time.