[amp_mcq option1=”MRP = VMP” option2=”MRP > VMP” option3=”VMP > MRP” option4=”None of the above” correct=”option1″]<\/p>\n
The correct answer is: A. MRP = VMP.<\/p>\n
Marginal revenue product (MRP) is the additional revenue that a firm earns by employing one more unit of labor. Value marginal product (VMP) is the additional value that a firm creates by employing one more unit of labor.<\/p>\n
Under conditions of perfect competition in the product market, the firm is a price taker. This means that the firm cannot affect the market price of its product. The firm’s marginal revenue (MR) is equal to the market price (P).<\/p>\n
The firm’s MRP is equal to its VMP. This is because the firm can sell all of its output at the market price, so the marginal revenue from selling an additional unit of output is equal to the market price.<\/p>\n
Therefore, under conditions of perfect competition in the product market, MRP = VMP.<\/p>\n
Option B is incorrect because MRP is equal to VMP, not greater than VMP.<\/p>\n
Option C is incorrect because VMP is equal to MRP, not greater than MRP.<\/p>\n
Option D is incorrect because MRP = VMP.<\/p>\n","protected":false},"excerpt":{"rendered":"
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