ACCA Advanced Performance Management (APM) Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

The marginal revenue product curve for labor represents the additional revenue that a firm gains from employing one more unit of labor, which essentially indicates the value of the last worker hired. This relationship forms the demand curve for labor because firms will continue to hire additional labor as long as the marginal revenue product of that labor is greater than the wage paid.

As employers assess the value brought by each additional worker, the curve demonstrates the decreasing value of each subsequent worker, reflecting the principle of diminishing marginal returns. Therefore, the marginal revenue product shows how much work contributes to revenue, guiding businesses in their hiring decisions. The demand for labor increases when the marginal revenue product is high and decreases when it is lower, which aligns directly with the fundamental definition of a demand curve in relation to labor.

In contrast, the other options do not accurately reflect the function of the marginal revenue product curve. The supply curve for labor outlines how many workers are willing to work at various wage levels, while the total revenue curve depicts the overall revenue without specifically addressing the contributions of additional labor. The profit margin curve is unrelated, as it focuses on profit instead of revenue generated per labor unit.