Holding quantities of all other inputs constant, a firm's MRP curve is:
A)its demand curve for the input regardless of market structure.
B)below its VMP curve if it is a monopolist in its output market.
C)its VMP curve if it is a monopolist in its output market.
D)above its VMP curve if it is a monopolist in its output market.

Question

Quizplus · Accepted Answer

For a monopolist, the MRP (Marginal Revenue Product) curve is below the VMP (Value of Marginal Product) curve because the monopolist faces a downward-sloping demand curve, meaning marginal revenue is less than price.

Holding Quantities of All Other Inputs Constant, a Firm's MRP