As the Quantity of Labor Increases, Value of Marginal Product

question 87

Multiple Choice

As the quantity of labor increases, value of marginal product for a perfectly competitive firm

• A) decreases because the firm must lower its price to sell a larger quantity.
• B) decreases because the marginal product of labor decreases.
• C) decreases because marginal revenue decreases.
• D) is constant because marginal revenue is constant.

---

Definitions:

Production Orders

Instructions to start production of a specific quantity of a product, detailing materials, timings, and resources required.

Direct Materials

Fundamental components directly associated with the creation of a specific item or provision of a service.

Direct Labor

The cost of employee labor that is directly involved in the manufacturing or production of goods or services.

Factory Overhead

Represents all indirect costs associated with the production process, including utilities, maintenance, and managerial salaries not directly traceable to specific products.