Author Question: What is the shape of a firm's marginal revenue product curve? Why does it look this way? What ... (Read 70 times)

neverstopbelieb · **on:** Jun 29, 2018

What is the shape of a firm's marginal revenue product curve? Why does it look this way?

What will be an ideal response?

Question 2

Cassie's Quilts alters, reconstructs, and restores heirloom quilts. Cassie has just spent 800 purchasing, cleaning, and reconstructing an antique quilt which she expects to sell for 1,500 once she is finished.

After having spent 800, Cassie discovers that she would need some special period fabric that would cost her 200 in material and time in order to complete the task. Alternatively, she can sell the quilt as is now for 900. What is her marginal benefit if she sells the quilt as is now?
A) 100
B) 900
C) She makes a marginal loss of 600, not a marginal benefit.
D) The marginal benefit cannot be determined.

missalyssa26 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The firm's marginal revenue product curve is downward sloping like the marginal product curve. The shape occurs as a result of diminishing returns in the short run.

Answer to Question 2

B