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Marginal Revenue Product
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the additional revenue created when the next worker is hired
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Marginal Resource Cost (Marginal Factor Cost)
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The cost of hiring the next worker.
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Marginal Revenue Product Formula
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Marginal Product X Price
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Hiring Rule
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Firms will hire where the Marginal Revenue Product is equal to the Marginal Factor Cost to maximize profit (MRP = MRC).
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Law of Diminishing Marginal Returns
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As more of a variable resource is added to a given amount of a fixed resource, marginal product eventually declines and could become negative
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Specialization
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Where each worker has a specific task resulting in an increasing marginal product.
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Collusion
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When Oligopolies cooperate illegally, in secret to maximize their profit.
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Monopolistic Competition
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a market structure in which many companies sell products that are different enough to have different set prices.
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Allocative Efficiency
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When the quantity produced and pr satisfies the needs of consumers and producers equally (where Supply equals Demand)
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Productive Efficiency
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Where the quantity produced is produced for the lowest cost (lowest point of ATC).