Under conditions of perfect competition in the product market ______.

MRP = VMP

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MRP > VMP

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VMP > MRP

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None of the above

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Solution

The correct option is A MRP = VMP

When there is perfect competition in the product market MR is equal to price (P), Marginal Revenue Product (MRP) also can be found out by multiplying the Col. Ill by Col. IV. Thus under perfect competition value of marginal product (VMP) will be equal to marginal revenue product (MRP).

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