Questions: Marginal revenue product cannot be calculated as MP × P for the firm with market power because MR ≠ P.

Transcript text: Marginal revenue product cannot be calculated as MP $\times \mathrm{P}$ for the firm with market power because $M R \neq P$.

Solution

The answer is the third one: $ MR \neq P $.

Explanation for each option:

$ MC \neq P $: This statement is true for firms with market power, as they do not operate in perfectly competitive markets where price equals marginal cost. However, this is not directly related to why marginal revenue product (MRP) cannot be calculated as marginal product (MP) times price (P).
$ MR > P $: This is incorrect. For a firm with market power, marginal revenue (MR) is actually less than price (P) because the firm must lower the price to sell additional units, which affects the revenue gained from all units sold.
$ MR \neq P $: This is the correct answer. In a firm with market power, marginal revenue is not equal to price because the firm faces a downward-sloping demand curve. To sell more units, the firm must lower the price, which means the additional revenue from selling one more unit (MR) is less than the price at which the unit is sold.
The firm must raise price to sell more: This is incorrect. A firm with market power must lower the price to sell more units, not raise it. This is a characteristic of a downward-sloping demand curve.

In summary, the reason marginal revenue product cannot be calculated as MP $\times$ P for a firm with market power is because $ MR \neq P $.

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