What Is Marginal Revenue Product?
Marginal revenue product
Marginal Revenue Product
Right!
- Chinese name
- Marginal Revenue Product
- Foreign name
- Marginal revenue product
- Definition
- Total revenue from an additional unit of input
- Formula
- MRP (x) = MP (x) * MR (y)
- Field
- Microeconomics
- Marginal revenue product
- Marginal income product refers to the income brought by the addition of a certain unit of production factor input when the input quantity of other production factors is constant. It is equal to the input marginal product (function MP on factors) multiplied by the firm's marginal return (function MR on output). In a perfectly competitive product market, the elasticity of demand faced by a single manufacturer is infinite. The marginal revenue of a competing manufacturer is equal to the price of the product, so a product with marginal revenue is equal to the marginal product times the price of the product. In a monopoly market, the marginal revenue of the manufacturer is less than the product price, so the marginal revenue product is less than the value of the marginal product.
- Marginal revenue product
- The marginal revenue product is the increase in total revenue due to the use of an additional unit of input. It is equal to the input marginal product (a function of factors) times the marginal return of a firm (a function of output). In a completely competitive product market, the elasticity of demand faced by a single manufacturer is infinite, and the marginal revenue of competing firms is equal to the price of the product, so the marginal product revenue is also equal to the marginal product times the price of the product. In a monopoly market, the marginal revenue of a manufacturer is less than the product price, so the marginal product revenue is less than the marginal product value.
- Formulated as: MRP (x) = MP (x) * MR (y) where x represents the use of production factors and y represents the output