The shape of the marginal revenue product curve for a perfectly competitive firm would be its marginal product curve because _ .
A)steeper than; its product's price increases as output increases
B)flatter than; its product's price decreases as output increases
C)flatter than; it must pay a higher wage to the variable factor as output increases
D)steeper than; MR decreases as output increases
E)the same as; MR is constant as output increases

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the price of the product is constant, therefore the marginal revenue product (MRP) curve will have the same shape as the marginal product (MP) curve. This is because each additional unit of the variable input will produce the same amount of revenue as the previous unit. Thus, the correct answer is E, the same as; MR is constant as output increases.

The Shape of the Marginal Revenue Product Curve for a Perfectly