Practice Quiz

AP Microeconomics

Category - Microeconomics

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If a business is operating under perfect competition, which of the following calculations would be used to determine the marginal revenue product?
  1. MRP = MP x Q
  2. MRP = MP/P
  3. MRP = MP x P
  4. MRP = MP - P
Explanation
Answer - C - If a business is operating under perfect competition, the equation MRP = MP x P would be used to determine the marginal revenue product.

Key Takeaway: The marginal revenue product (MRP) is the revenue that the business can expect from using one more unit of a factor of production. If operating under perfect competition, the MRP can be derived from multiplying that factor’s marginal product (MP) by the price of the product (P).
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