Marginal Revenue Product of Labor

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A Marginal Revenue Product of Labor is a measure of the marginal product of labor (MP) and the marginal revenue (MR) given by MR×MP



References

2014


2013

  • http://www.sparknotes.com/economics/micro/labormarkets/labordemand/section1.rhtml
    • QUOTE: If the marginal revenue product (MRP) of labor is equal to the market wage, the firms will be at their optimal point of labor consumption, since buying more labor would mean that the MRP is less than the wage, and buying less labor would mean that the MRP is greater than the wage. If the marginal revenue product of labor is less than the market wage, then the firms are using too much labor, and those firms will probably cut back on the hours they buy until the MRP of labor is equal to the wage.
      • MRP > w : The firm will buy more labor
      • MRP = w : The firm is buying the right amount of labor
      • MRP < w : The firm is buying too much labor