- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 1. Supply Analysis: Cost, Marginal Return, and Productivity
CFA Practice Question
The marginal revenue product will shift to the right if the ______
A. price of the product falls.
B. productivity of the resource decreases.
C. quantity of other inputs working with the input increases.
Explanation: An increase in the use of other inputs will increase the productivity of this input, e.g., labor which has more or better capital to work with. The marginal product of the input increases, and consequently so does the marginal revenue product. Decreased product price or decreased productivity will decrease marginal revenue product for any unit of input and shift the marginal revenue product curve to the left.
User Contributed Comments 3
| User | Comment |
|---|---|
| CoffeeGirl | MRP rises due to either raise in MP or raise in MR. |
| siggarusfigs | But wouldn't a decrease in price decrease marginal revenue? |
| yrobinson | Is this situatin not either Techological or economic efficiency? Certain Level of output being produced more efficiently. Getting more bang for bucks! |