Marginal Revenue Product (MRP) refers to the additional revenue generated by hiring one more unit of a resource, such as labor.
Related terms
Productivity: The measure of output per unit of input. Higher productivity leads to higher MRP because each unit of input generates more revenue.
Marginal Product: The additional output produced by using one more unit of a resource. MRP is closely related to marginal product since both measure the impact of adding one more resource.
Demand for Labor: Refers to the number of workers a firm is willing and able to hire at different wages. MRP helps determine the demand for labor because firms will hire until MRP equals or exceeds the wage rate.