Glossary · Micro · Factor markets

Marginal revenue product (MRP)

The extra revenue a firm earns from hiring one more worker: the worker’s marginal product times the marginal revenue from selling that output. For a firm selling at a fixed price it is just marginal product times price.

Also called: MRP, marginal revenue product of labor, MRPL

Watch it happen step by stepTaught in: Marginal Revenue Product

Related terms

Marginal product of labor (MPL)Labor demandMarginal factor cost (MFC)

More from factor markets

Backward-bending labor supplyDerived demandEquilibrium wageLabor supplyMinimum wageMonopsony

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