What happens to the marginal revenue product curve of a factor as more of a complementary factor is hired?
A) It shifts to the left, because its marginal product decreases.
B) It shifts to the left, because its marginal product increases.
C) It shifts to the right, because its marginal product decreases.
D) It shifts to the right, because its marginal product increases.

Question

Quizplus · Accepted Answer

The marginal revenue product curve of a factor shifts to the right as more of a complementary factor is hired because the marginal product of the factor increases. This is due to the fact that with more of the complementary factor, the original factor can produce more output, thus increasing its marginal product.

What Happens to the Marginal Revenue Product Curve of a Factor