Marginal Revenue Product Calculator

Calculate the Marginal Revenue Product (MRP) of labor, which represents the additional revenue generated by hiring one more unit of labor.

Input Parameters

The additional output produced by one more unit of labor

The additional revenue from selling one more unit of output

Calculation Results

Calculation Formula

MRP = MP × MR

Where:
MRP = Marginal Revenue Product
MP = Marginal Product of Labor (additional output per additional unit of labor)
MR = Marginal Revenue (additional revenue per additional unit of output)

Calculation Result

Marginal Revenue Product (MRP): $0.00

This is the additional revenue generated by hiring one more unit of labor

Marginal Revenue Product Calculator Usage Guide

Learn how to use the Marginal Revenue Product Calculator and understand its importance in business decision-making

What is Marginal Revenue Product (MRP)?

Marginal Revenue Product (MRP) measures the additional revenue generated by employing one more unit of labor. It's a crucial concept in microeconomics that helps businesses determine optimal hiring levels.

How to Use This Calculator

  1. Enter the Marginal Product (MP) of labor. This is the additional output produced when one more worker is hired.
  2. Enter the Marginal Revenue (MR) of output. This is the additional revenue earned from selling one more unit of the product.
  3. Click the "Calculate" button to compute the MRP.

Interpreting the Results

The calculator will display the MRP value in dollars. This number represents the additional revenue generated by hiring one more worker.

Practical Applications

  • Optimal Hiring Decision: Businesses should hire workers as long as MRP is greater than or equal to the wage rate.
  • Resource Allocation: Helps allocate resources efficiently between different production methods.
  • Performance Evaluation: Can be used to assess the productivity of different workers or departments.

Example Calculation

Suppose a factory produces 15 additional units of product (MP = 15) when it hires one more worker, and each unit sells for $20 (MR = $20). The MRP would be 15 × $20 = $300, meaning hiring this additional worker generates $300 in additional revenue.

Note: This calculator assumes perfect competition in the product market. In imperfect markets, MR may differ from the price of the product.