Overview
The Marginal Revenue Product of Labor (MRP) is a key concept in economics that helps businesses understand the value of additional labor. By calculating MRP, companies can make informed decisions about hiring and wage setting, ensuring they maximize their profits. MRP is influenced by factors such a...
Key Terms
Example: If hiring one more worker increases output from 10 to 12 units, the marginal product is 2.
Example: If a company sells 100 units at $10 each, its revenue is $1,000.
Example: A company may demand more labor when the wage is low.
Example: An employee earning $15 per hour is paid $15 for each hour worked.
Example: The production function might show how labor and capital combine to produce goods.
Example: Adding more workers to a fixed-size factory may lead to less additional output per worker.