Q16
Under conditions of perfect competition in the product market
A.
MRP = VMP
AnswerB.
MRP > VMP
C.
VMP > MRP
D.
None of the above
Answer: Option A
Solution
Answer: Option A
Solution:
Under conditions of perfect competition in the product market MRP = VMP. Under the assumption of perfect competition a firm employs a factor up to that number at which the price of the factor is just equal to the value of the marginal product (=MRP of the factor).