Practice Quiz

Praxis II: Economics Content Knowledge Exam Prep

Category - Economics

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What term refers to the contribution that using one more unit of a particular factor makes to a business’s bottom line?
  1. Marginal utility
  2. Marginal derived demand
  3. Marginal revenue product
  4. Resource quantity
Explanation
Answer - C - The marginal revenue product is the contribution that using one more unit of a particular factor makes to a business’s bottom line.

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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