what is the relationship between labor and marginal product?
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The marginal revenue product of labor (MRPL) is the additional amount of revenue a firm can generate by hiring one additional employee. It is found by multiplying the marginal product of labor by the price of output. Firms will demand labor until the MRPL equals the wage rate.
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The marginal revenue product of labor (MRPL) is the additional amount of revenue a firm can generate by hiring one additional employee. It is found by multiplying the marginal product of labor (MPL) – the amount of additional output one additional worker can generate – by the price of output.
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Average total cost is the total cost divided by output. What is the relationship between marginal costs and marginal product? As marginal product rises, marginal cost falls. As marginal product falls, marginal cost rises.
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The marginal revenue product curve indicates how marginal revenue product is related to the quantity of a variable input used in production. ... From the third worker on, the marginal revenue product declines, as each added worker contributes less to total revenue than previous workers. This is seen as a negative slope.
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Total product is the total amount produced per a set of resources, average product is the average cost per unit produced per set of resources, and marginal product is the cost for the very next unit to be produced in resources.
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MARGINAL PRODUCT: The change in the quantity of total product resulting from a unit change in a variable input, keeping all other inputs unchanged. Marginal product, usually abbreviated MP, is found by dividing the change in total product by the change in the variable input.
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Basic economic theory suggests that wages depend on a worker's marginal revenue product MRP. (this is basically the value that they add to the firm which employs them.) MRP is determined by two factors: ... MR – Marginal revenue of last good sold – Effectively the price and demand for the good that the worker produces.
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Answer: Definition - Marginal revenue is the rise in income that occurs from the sale of one extra unit of product. While marginal revenue can continue constantly over a particular level of output, it follows the law of diminishing returns and will ultimately decrease as the output level increases.
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Marginal cost is an important measurement because it accounts for increasing or decreasing costs of production, which allows a company to evaluate how much they actually pay to ? produce? one more unit. Initially, marginal cost will normally decrease through a short range, but increase as more is produced.
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Total product is simply the output that is produced by all of the employed workers. Marginal product is the additional output that is generated by an additional worker.
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The relation between marginal revenue and the quantity of output produced depends on market structure. For a perfectly competitive firm, marginal revenue is equal to price and average revenue, all three of which are constant.
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Relationship between Average Cost and Marginal Cost If the average cost rises due to an increase in the output, the marginal cost is more than the average cost. Marginal cost is equal to the average cost when the marginal cost is minimum.
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Marginal cost is the money paid for producing one more unit of a good. Marginal revenue is the money earned from selling one more unit of a good.
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One of the earliest explanations of the inverse relationship between price and quantity demanded is the law of diminishing marginal utility. This law suggests that as more of a product is consumed the marginal (additional) benefit to the consumer falls, hence consumers are prepared to pay less.
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Marginal-cost pricing. ... Marginal-cost pricing, in economics, the practice of setting the price of a product to equal the extra cost of producing an extra unit of output. By this policy, a producer charges, for each product unit sold, only the addition to total cost resulting from materials and direct labour.
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Marginal costs are a function of the total cost of production, which includes fixed and variable costs. ... Since fixed costs are constant, they do not contribute to a change in total production costs. Therefore, marginal costs exist when variable costs exist.
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A firm will purchase a resource if THE BENEFIT ASSOCIATED WITH THE PURCHASE IS GREATER THAN OR EQUAL TO ITS COST. ... The cost of an additional unit of a resource, such as labor is called THE MARGINAL RESOURCE COST. • The demand for resources is DERIVED from the demand for the goods and services produced by the resources.