Asked by
Maria Velez Romero
on Nov 06, 2024
Verified
If the marginal revenue product of land is greater than its price, a firm should
A) use more land.
B) use less land.
C) try to decrease the productivity of land.
D) decrease the price it is willing to pay for land.
Marginal Revenue Product
The additional revenue generated by employing one more unit of a resource, such as labor or capital, holding all other input factors constant, crucial in determining how many resources a firm should hire or use.
Productivity
A measure of the efficiency of production, usually calculated as the ratio of output produced to inputs used.
- Familiarize oneself with the marginal revenue product (MRP) concept and understand its consequence on labor and land deployment decisions made by firms.
- Understand the economic reasoning for employing more or fewer production factors based on their Marginal Revenue Product (MRP) compared to their cost.
Verified Answer
WS
Learning Objectives
- Familiarize oneself with the marginal revenue product (MRP) concept and understand its consequence on labor and land deployment decisions made by firms.
- Understand the economic reasoning for employing more or fewer production factors based on their Marginal Revenue Product (MRP) compared to their cost.