Asked by Sandra Feliciano on May 06, 2024

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The marginal revenue product (MRP) of land declines as more land is brought into production because:

A) land is a "free and nonreproducible gift of nature."
B) of diminishing returns.
C) land rent has no incentive function.
D) the supply of land is fixed.

Marginal Revenue Product (MRP)

The additional revenue generated from using one more unit of a factor of production, holding all other factors constant.

Diminishing Returns

A principle stating that as an additional unit of a factor of production is added, while other factors are held constant, the incremental increase in output will eventually decrease.

Nonreproducible

Refers to goods or assets that cannot be exactly replicated or duplicated, often due to uniqueness or specific characteristics.

  • Comprehend the marginal revenue product of land and its influence on the demand and supply for land.
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JH
julia hurlburtMay 09, 2024
Final Answer :
B
Explanation :
The principle of diminishing returns states that as more units of a variable input (such as land) are added to a production process with a fixed amount of other inputs (such as capital and labor), the marginal product of that input (in this case, the marginal revenue product of land) will eventually decrease. Therefore, as more land is brought into production, the MRP of land will decline due to diminishing returns. The other options (A, C, D) are not directly related to the concept of diminishing returns and do not explain why the MRP of land would decline.