Question

1.Value of marginal product differs from marginal revenue product in each of the following except __________.

A. monopoly

B. oligopoly

C. perfect competition

D. monopolistic competition

2.If the firm operates in markets that are not perfectly competitive, what will the price will tend to be?

A. Equal to marginal revenue

B. Less than marginal revenue

C. Greater than marginal revenue

D. The same as the competitive market

3.At every level of input, the marginal revenue product of the input equals which of the following?

A. Marginal cost

B. Marginal revenue times output

C. Marginal revenue times marginal physical product

D. Marginal physical product times marginal cost

4.Which of the following best describes the demand for an input?

A. It is a derived demand.

B. It is a demand included in production.

C. It is demand dependent on the input.

D. It is demand dependent on government policy.

Answer 1

1.c. Perfect competition

Reason- Under perfect competition Demand curve is perfectly elastic and Price is equal to Marginal revenue. Hence VMP=MRP

2.C. Greater than marginal revenue

Reason- In markets other than perfect competition, in order to sell more goods, seller has to reduce the prices.Hence Price and demand curve is greater than Marginal revenue.

3. C. Marginal revenue times marginal physical product

Reason- Marginal product of input is equal to Marginal revenue times marginal product. marginal product of input is the change in revenue by employing one more unit of input.

4a. Derived Demand

Reason- Derived demand states that demand of an input is dervied from the demand of the output that it produces.