marginal revenue product

     

The marginal revenue prouctivity theory of wages, also referred to as the marginal revenue product of labor, is the change in total revenue earned by a firm that results from employing one more unit of labor. It is a neoclassical model that determines, under some conditions, the optimal number of workers to employ at an exogenously determined market wage rate. See Daniel S. Hamermesh, The demand for labor in the long run; published in Handbook of Labor Economics (Orley Ashenfelter and Richard Layard, ed.), 1986, p. 429.

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