ECON 101 Lecture Notes - Lecture 11: Marginal Revenue Productivity Theory Of Wages, Ceteris Paribus, Marginal Revenue
Document Summary
Markets for factors of production" chapter 12 the markets for. Factors of production labour, capital, natural resources and entrepreneurial ability used to produce goods and services: how firms choose the profit- maximising quantity of labour to employ: the. Demand for labour: this is different to the demand for final goods and services because this is a derived demand. Marginal product of labour the additional output a firm produces as a result of hiring one more worker. When deciding how many workers to hire a firm isn"t interested in how much output will increase as it hires another worker, but in how much revenue will increase as it hires another worker. This can be calculated by multiplying the additional output produced by the product price. This amount is called the marginal revenue product of labour (mrp). Mrp the change in the firm"s revenue as a result of hiring one more worker.
