The marginal revenue product curve for an input is downward sloping because of the law of diminishing returns.

Question

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The law of diminishing returns states that as more of a variable input is added to a fixed input, the marginal product of the variable input will eventually decrease. This means that the marginal revenue product, which is the additional revenue generated by adding one more unit of the variable input, will also decrease. Therefore, the marginal revenue product curve will be downward sloping.

The Marginal Revenue Product Curve for an Input Is Downward