A2 Economics – Labour Market – MRPL

Marginal Revenue Product refers to the amount of revenue generated by an additional worker. This is a theory of wages where workers are paid the value of their marginal revenue product to the firm and is based on the assumption of a perfectly competitive labour market. Therefore an employer will hire workers up to the point where the value of the marginal product of labour equals the wage that is being paid. The demand curve for labour can therefore be represented by the value of the marginal product curve – see graph below and a revision mindmap.

Adapted from: AS and A Level Economics Revision by Susan Grant

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