Question

decrease in demand for a product, holding other things constant, will decrease the marginal revenue product of labor. O have an undetermined effect upon the marginal revenue product of labor. increase the marginal revenue product of labor. o not change the marginal revenue product of labor.

Answer 1

Answer:

Decrease in demand for a product, holding other things constant, "will decrease the marginal revenue product of labor".

Explanation:

The extra revenue that a firm earns as a result of a newly hired worker is known as the marginal revenue product of labor.

A new worker is hired to increase the quantity of goods produced and consequently, increase the firm's revenue through sales of the goods.

If however, more goods are produced but the demand for the product decreases, then this will cause a decrease in the marginal revenue product of labor.

In other words, the firm won't earn extra revenue if the products are not being bought.