AP MicroeconomicsFactor Markets
Marginal Revenue Product
Marginal Revenue Product (MRP) is the additional revenue a firm earns by employing one more unit of a factor of production.
MRP is calculated by multiplying the marginal product of a factor (the extra output from one more unit) by the marginal revenue from selling that output. Firms will hire a factor up to the point where its MRP equals its marginal resource cost (MRC); in a perfectly competitive factor market, MRC equals the factor's price. MRP is the firm's demand curve for a factor.
Formula / Example
MRP = MP × MR
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