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Econ Note 1.docx

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Department
Economics
Course
ECON 110
Professor
Ian James Cromb
Semester
Fall

Description
Any profit­maximizing firm increases its output until its marginal cost equals its marginal  revenue ­The firm will increase its use of any factor of production until the last unit of the  factor adds as much to revenue as it does to costs  Hiring an extra unit of the factor also leads to an increase in the firm’s output and  revenue. ­The increase in the firm’s revenue attributed to this extra unit of the factor is  called the factor’s marginal revenue product.  Marginal Revenue Product (MRP): The extra revenue that results from using one unit  more of a variable factor.  ­The factor’s marginal revenue product is its marginal product (MP) 
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