Question

For a perfectly competitive firm, the value of the marginal product is                                                                                                                                                       

                a.) the same thing as marginal factor cost.                                                                                                          

                b.) the same thing as marginal physical product                                                                                                 

                c.) marginal product times the product price.                                                                                                      

                d.) marginal product times the wage rate.

Answer 1

Answer to the question:

Option c: For a perfectly competitive firm, the value of the marginal product is marginal product times the product price.

Explanation: The value of marginal product is obtained by multiplying marginal physical product (MPP) with Price (AR) of the product. It can be represent by VMP=MPPxP. In case of perfect competition the P=AR=MR, thus, the VMP=MRP in case of perfect competition. The MRP=MRxMPP. as MR=AR in perfect competition, thus, VMP=MRP=MRxMPP=ARxMPP.

Hope, I solved your query. Give good feedback.

Comment, I'll get back to you ASAP.

Stay safe. Thank you.