A Decrease in Demand for a Product, Holding Other Things

question 369

Multiple Choice

A decrease in demand for a product, holding other things constant, will

• A) increase the marginal revenue product of labor.
• B) decrease the marginal revenue product of labor.
• C) not change the marginal revenue product of labor.
• D) have an undetermined effect upon the marginal revenue product of labor.

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Definitions:

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, all producing a homogenous product, with no single entity able to influence the market price.

Marginal Revenue

The extra income a company earns by selling an additional unit of a product or service.

Slope

The measure of the steepness or/incline of a line, representing the ratio of the vertical change to the horizontal change between two points on the line.

Average Revenue

The revenue generated per unit of output sold, calculated by dividing total revenue by the number of units sold.