If the Marginal Revenue Product of an Input Is Greater

question 50

Multiple Choice

If the marginal revenue product of an input is greater than its price, the

• A)firm should decrease its use of the input to bring the two values into equality.
• B)firm should raise the price of the product.
• C)firm should increase the use of the input to bring the two values into equality.
• D)firm should search for another input to use in its production.

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Definitions:

Constant Dollar

An accounting method that adjusts financial statements for inflation, thereby allowing comparison of buying power across different periods.

Inflation

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.

Initial Withdrawal

The first amount of money taken out from an investment or retirement account.

Fixed Cash Flow

Stable and predictable cash inflows or outflows over a period, crucial for budgeting and financial planning.