Holding the price of a firm's output constant, if the marginal product of labor increases
A)the marginal revenue product of labor decreases.
B)the marginal revenue product of labor also increases.
C)the marginal products of other inputs also increase.
D)the marginal revenue product of labor may increase or decrease.

Question

Quizplus · Accepted Answer

The marginal revenue product of labor (MRPL) is the additional revenue a firm earns from hiring one more unit of labor. If the marginal product of labor (MPL) increases, the firm can produce more output with the same amount of labor, which should increase the firm's revenue. As a result, the MRPL would also increase. Therefore, if the price of the firm's output is held constant, an increase in MPL would lead to an increase in MRPL.

Holding the Price of a Firm's Output Constant, If the Marginal