Value of marginal product (VMP) of a factor is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Price times marginal product of the factor
The value of marginal product (VMP) is the price of the good times the marginal product of the factor. It is the money value of the extra output one more unit of the factor gives.
For a perfectly competitive firm, marginal revenue equals price. So for labour, MRPL = MR × MPL becomes VMPL = price × MPL.
Note: The Glossary at the back of the book is not only for looking up words. This whole question lives in one Glossary line, so give those pages a read too.
NCERT (2026-27): “Wage Determination in Labour Market … Since we are dealing with a perfectly competitive firm, marginal revenue is equal to the price of the commoditya and hence marginal revenue product of labour in this case is equal to the value of marginal product of labour (VMPL).” Glossary: “Value of marginal product (VMP) of a factor – Price times Marginal Product of the factor.” |