Marginal revenue product
What Marginal revenue product means in Economics A-Level, as defined for AQA.
Definitions of Marginal revenue product
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Reference: AQA
The addition to total revenue from employing one extra unit of labour, calculated as marginal physical product multiplied by marginal revenue.
Higher product demand increases this, shifting labour demand to the right, and more efficient workers generate a higher one.
The revenue generated by an additional worker, from which the downward-sloping demand curve for labour is derived.
The basis from which labour demand is derived, reflecting the value of what workers produce.
Topics that use Marginal revenue product
- The demand for labour, marginal productivity theory (AQA A-Level)
- The determination of relative wage rates and levels of employment in perfectly competitive labour markets (AQA A-Level)
Related terms
- Demand curve for labour
- Derived demand
- Factor markets
- Imperfect information
- Labour immobility
- Labour markets
- Law of diminishing returns
- Market equilibrium
Using Marginal revenue product in the exam
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