Cost
Marginal product
Price
Increasing return
Answer is Right!
Answer is Wrong!
The correct answer is: B. Marginal product.
Marginal product is the additional output that a firm produces when it increases the use of one factor of production by one unit, while holding all other factors constant. In a competitive market, the price of a factor of production will be equal to its marginal product. This is because firms will only hire factors of production up to the point where the marginal revenue product (MRP) is equal to the wage rate. The MRP is the additional revenue that a firm generates when it increases the use of one factor of production by one unit.
The other options are incorrect because:
- Cost is the total amount of money that a firm spends on inputs. It includes the cost of labor, capital, land, and other inputs.
- Price is the amount of money that a firm charges for its output.
- Increasing return is a situation in which a firm’s output increases by more than the amount of inputs that it uses. This can happen when there are economies of scale.