Asked by Maxine Wiebenga on May 09, 2024
Verified
You can find the MRP by multiplying marginal physical product by price for
A) both the perfect competitor and the imperfect competitor.
B) neither the perfect competitor nor the imperfect competitor.
C) only the perfect competitor.
D) only the imperfect competitor.
Marginal Physical Product
Represents the additional quantity of output that is produced by utilizing one more unit of a variable input, holding all other inputs constant.
Perfect Competitor
A Perfect Competitor refers to a market participant in a perfect competition market structure, where there are many buyers and sellers, and none can influence the market price.
Imperfect Competitor
A market participant that does not meet the criteria of a perfect competitor, often having some control over market prices due to lack of competition.
- Recognize the association between the marginal revenue product (MRP) and the determination to allocate additional resources.
Verified Answer
SS
Sreekari SamudralaMay 16, 2024
Final Answer :
C
Explanation :
The relationship between price and marginal revenue product (MRP) is different for perfect and imperfect competitors. For a perfect competitor, the MRP is equal to the price because they cannot influence the market price. However, for an imperfect competitor, the MRP is less than the price because they have some market power and their additional output will lower the market price. Therefore, the correct answer is only for the perfect competitor, which is option C.
Learning Objectives
- Recognize the association between the marginal revenue product (MRP) and the determination to allocate additional resources.