Table 13-1 -Refer to Table 13-1.What Portion of the Marginal Revenue of the Marginal

question 43

Multiple Choice

Table 13-1

-Refer to Table 13-1.What portion of the marginal revenue of the 5th unit is due to the output effect and what portion is due to the price effect?

• A)output effect = $3.00; price effect = $0.50
• B)output effect = $1.50; price effect = $2.00
• C)output effect = $5.50; price effect = -$2.00
• D)output effect = $4.00; price effect = -$0.50

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Definitions:

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.

Marginal Revenue Product

The additional income generated from using one more unit of a resource or factor of production.

Marginal Product

The additional output that results from using one more unit of a factor, keeping other factors constant.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor, such as labor or capital, in the production process, critical for decision-making in resource allocation.