1. What is Marginal Revenue Product?

Marginal Revenue Product (MRP) is the additional revenue generated by employing one more unit of a resource (like labor or capital). It's calculated by multiplying the marginal revenue by the marginal physical product of the resource.

2. How Does the Calculator Work?

The calculator uses the MRP formula:

Where:

• \( MR \) — Marginal Revenue (USD)
• \( MPP \) — Marginal Physical Product (units)

Explanation: MRP shows how much additional money a business can expect to earn by adding one more unit of input.

3. Importance of MRP Calculation

Details: MRP is crucial for determining optimal resource allocation, making hiring decisions, and setting wage rates in competitive labor markets.

4. Using the Calculator

Tips: Enter marginal revenue in USD and marginal physical product in units. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between MRP and VMP?
A: Value of Marginal Product (VMP) uses product price rather than marginal revenue. In perfect competition, MRP equals VMP.

Q2: How is MRP used in hiring decisions?
A: Businesses should hire workers until MRP equals the wage rate to maximize profits.

Q3: What factors affect MRP?
A: MRP depends on worker productivity (MPP) and the marginal revenue from selling additional output.

Q4: Does MRP decline?
A: Yes, due to diminishing marginal returns, MRP typically declines as more units of a resource are employed.

Q5: How does market structure affect MRP?
A: In imperfect competition, MRP declines faster because marginal revenue decreases with output.