the marginal rate of suosuito a. 3 b. 1/2 c. 1/3 d. 2/3 . yical t a fi hires adi

Question

the marginal rate of suosuito a. 3 b. 1/2 c. 1/3 d. 2/3 . yical t a fi hires aditioal okers, what happens to he marginal product of labur and th revenue product? a. The marginal product of labour and the marginal revenue product both decrease. b. The marginal product of labour decreases and the marginal revenue product stays constant, c. The marginal product of labour stays constant and the marginal revenue product decreases. d. The marginal product of labour decreases and the marginal revenue product increases. Page 10 of 15

Explanation / Answer

A firm hires additional labour only when it increases marginal revenue product by hiring the extra worker.

And the marginal product of labour decreases by the concept of diminishing marginal returns.

OPTION D

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