Problem 7 The added output for which one a... [FREE SOLUTION]

Chapter 26: Problem 7

The added output for which one additional input of labor is responsible is its (LO3) a) marginal revenue product b) marginal physical product c) average revenue product d) average physical product

Short Answer

Expert verified

The correct answer for the added output for which one additional input of labor is responsible is b) marginal physical product.

Step by step solution

Introduction to terms

To solve this problem, it's essential to understand what each of these terms means: a) Marginal Revenue Product (MRP) is the additional revenue generated by employing one more unit of labor holding other factors constant. b) Marginal Physical Product (MPP) is the additional output produced by using one more unit of labor holding other factors constant. c) Average Revenue Product (ARP) is the total revenue generated by a unit of labor divided by the total number of labor units employed. d) Average Physical Product (APP) is the total output produced divided by the total number of labor units employed.

Identify the correct term

Since this exercise is focused on finding the added output for which one additional input of labor is responsible, the correct term should be the one that deals with the additional output produced by employing one more unit of labor. Among the given terms, marginal physical product (MPP) fits this description because it refers to the additional output produced by using one more unit of labor holding other factors constant. So, the correct answer is: b) marginal physical product