According to the Marginal Productivity Theory, a Perfectly Competitive Firm

question 36

Multiple Choice

According to the marginal productivity theory, a perfectly competitive firm that is a factor price taker pays its factors their

• A)MRP.
• B)VMP.
• C)MPP.
• D)a and b
• E)all of the above

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Definitions:

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, a measure of how sales growth translates to growth in operating income.

Forecasting Error

The difference between the actual outcome and the predicted value in a forecast.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating a company's fixed versus variable costs.

Variable Costs

Expenses that change in proportion to the level of production or sales, such as raw materials and labor costs.