What is derived demand?
Demand for one item depending upon the demand for another item.
Demand for one item depending upon the cost of another item.
Demand for one item depending upon the quantity of another item.
Demand for one item depending upon the supply of another item.
The determinants of demand are what?
Productivity; Marginal Output; Complementary Labour Costs; Wages; Demand For Product Being Made; Subsidies (PMC LWDS)
Productivity; Wages; Complimentary Labour Costs; Price of Other FOPs; Demand For Product Being Made (PWC PD)
Marginal Revenue; Complementary Labour Costs; Wages; Demand For Product Being Made (MCL WD)
What does 'Marginal Revenue Product' actually mean?
The change in output that results from employing one more worker.
The change in a firm's revenue from employing additional labour.
The change in a firm's revenue from employing one additional unit of labour.
The change in output that results from purchasing additional capital equipment.
The quantity of labour employed in a production process will be determined at the point where:
The marginal revenue product is larger than the marginal cost of labour.
The marginal revenue product is larger than the average revenue.
The marginal revenue product is less than the average cost.
The marginal revenue product is equal to the marginal cost of labour.
Marginal Revenue Product is formed by multiplying what?
Average revenue with marginal labour cost.
Total revenue with total output.
Marginal product and marginal revenue.
Marginal cost and total labour costs.
In a perfectly competitive market, marginal revenue will equal what?
Average cost
Price
Average revenue
Under monopolistic competition, oligopoly and monopoly, what does marginal revenue product do?
Marginal product increases with output.
Marginal product remains the same with output.
Marginal product decreases with output.
If the wage rate is to increase, what will occur on the marginal revenue product diagram?
The marginal revenue product curve will shift to the right.
The marginal cost of labour curve will move to the left.
The marginal cost of labour curve will move upwards.
The marginal revenue product curve will shift downwards.
Why is it difficult to measure marginal revenue product?
Because few companies employ exactly the right number of workers.
Because it is difficult to gauge the respective contribution each worker makes to overall output.
Because each worker has access to different levels of capital, meaning their output is different.
At may come down to value judgements as some products cannot be quantitatively measured.
Marginal Revenue Product theory assumes what?
Fixed factors of production apart from labour; Labour market is perfectly competitive; Homogeneous labour units; Product market is perfectly competitive; Wage takers (firms) - (FLH PW)
Fixed factors of production apart from labour; Labour market is perfectly competitive; Labour units are all paid the same; Product market is perfectly competitive; Wage takers (firms) - (FLL PF)
Fixed factors of production apart from labour; Product market is perfectly competitive; Homogeneous labour units; Wage takers (firms); Marginal revenue is equal to marginal cost of labour - (FPH WM)
Define 'Law of Diminishing Marginal Returns'
A decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased
An decrease in the marginal (per-unit) output of a production process as the amount of labour is increased
An increase, then a decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased
