If wage rate is less than the average revenue product, th...
If wage rate is less than the average revenue product, the firms would be earning_______
Loss
Super normal profit
Normal profit
Higher revenue
Correct answer is B
MRP = Marginal Revenue Product
ARP = Average Revenue Product
Therefore, if the wage rate is less than the ARP, the firm will make super normal profit. As a result, new forms will enter the industry and the demand for labour will increase which will push up the wage rate so as to be equal to the ARP.
Similar Questions
The difference between the gross domestic product (GDP) and gross national product (GNP) is? ...
Farmers' income may fall if they produce more cash crops for export because ...
Population Statistics of a Country. The dependency ratio between 1960 and 1990 is ...
The following is NOT a reason for the existence of small firms ...
What is the ratio of expenditure on health to agriculture? ...
If the actual population in a country is less than the optimum population, then ...