Question

The amount that an additional unit of a factor adds to a firm's total revenue is called:

a. value of the marginal product.
b. marginal product.
c. marginal revenue.
d. additional revenue product.
e. marginal cost.

Answer 1

The correct answer is option a. The amount that an additional unit of a factor adds to a firm's total revenue is called the value of the marginal product.

Step-by-step explanation:

The correct answer is a. value of the marginal product.

The amount that an additional unit of a factor adds to a firm's total revenue is called the value of the marginal product. It represents the additional revenue that a firm earns by using one more unit of a factor of production, such as labor or capital. This concept is used to determine how much a firm should pay for an additional unit of a factor of production, based on the additional revenue it generates.

For example, if hiring one more worker increases a firm's total revenue by $100, then the value of the marginal product of that worker is $100. By comparing the value of the marginal product to the cost of hiring an additional worker, a firm can determine whether it is profitable to do so.