Analysis the Following Figure Shows the Marginal Revenue Product of a a Resource

question 16

Multiple Choice

Analysis
The following figure shows the marginal revenue product of a resource [MRP]:
Figure 14.1

-In Figure 14.1, if the price of the resource is equal to 0C and the resource market is perfectly competitive, the quantity employed of the resource would be:

• A)less than L₂.
• B)equal to L₁.
• C)equal to L₂.
• D)equal to L₃.
• E)more than L₃.

---

Definitions:

Negative Externalities

A situation where a third party suffers from a decision or action made by others, typically not reflected in the market price.

Positive Externalities

Benefits enjoyed by third-party individuals or the society at large, which result from an economic activity but are not reflected in the market prices.

Negative Externality

An external effect of a product or activity that imposes a negative impact on a third party or the environment.

Internalize

The process of taking into account the external effects of economic actions, such as externalities, within the decision-making process.