This preview shows page 1. Sign up to view the full content.
Unformatted text preview: output produced (called the input’s marginal product) and the marginal revenue generated per unit of physical output.-Therefore call the marginal income produced by a unit of input the input’s marginal revenue product.-Marginal product of labor is the change in physical output produced by a change in the units of labor, holding capital constant.-MPl =change in Q / change in L-Marginal product of capital will be defined as the change in output associated with a one-unit change in the stock of capital, holding labor constant.-MPk = chang in Q/ change in K-If there is a perfectly competitive market, and the firm has no control over product price, the marginal revenue per unit of output sold is equal to product price (P).-If the firm has some degree of monopoly power in its market, extra units of output can be sold only if product price is reduced. (MR < P)-Marginal revenue product of labor = marginal product of labor x marginal revenue....
View Full Document
This note was uploaded on 01/24/2009 for the course ILRLE 2400 taught by Professor Smithr during the Fall '07 term at Cornell.
- Fall '07