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The marginal profit per unit of labor equals the marginal revenue product of labor minus the marginal cost of labor or M π L = MRP L − MC L A firm maximizes profits where M π L = 0. The marginal revenue product is the change in total revenue per unit change in the variable input assume labor. [10] That is, MRP L = ∆TR/∆L.
Average physical product (APP), marginal physical product (MPP) In economics and in particular neoclassical economics, the marginal product or marginal physical productivity of an input (factor of production) is the change in output resulting from employing one more unit of a particular input (for instance, the change in output when a firm's labor is increased from five to six units), assuming ...
With a perfectly competitive goods market, the MRP is calculated by multiplying the price of the end product or service by the Marginal Physical Product of the worker. If the MRP is greater than a firm's Marginal Cost, then the firm will employ the worker since doing so will increase profit. The firm only employs however up to the point where ...
The marginal revenue product of a worker is equal to the product of the marginal product of labour (the increment to output from an increment to labor used) and the marginal revenue (the increment to sales revenue from an increment to output): =. The theory states that workers will be hired up to the point when the marginal revenue product is ...
Similarly, if the third kilogram of seeds yields only a quarter ton, then the marginal cost equals per quarter ton or per ton, and the average cost is per 7/4 tons, or /7 per ton of output. Thus, diminishing marginal returns imply increasing marginal costs and increasing average costs. Cost is measured in terms of opportunity cost. In this case ...
It measures output per-worker-employed or output-per-unit of capital. The third measures of production and efficiency is the marginal product. It is the change in output from increasing the number of workers used by one person, or by adding one more machine to the production process in the short run.
The marginal product of a factor of production is the change in output when that factor of production changes, holding constant all the other factors of production as well as the total factor productivity. The marginal product of capital, corresponds to the first derivative of the production function with respect to capital:
The surplus value/product is the materialized surplus labour or surplus labour time while the necessary value/product is materialized necessary labour in regard to workers, like the reproduction of the labour power. [6] Marx called the rate of surplus value an "exact expression of the degree of exploitation of labour power by capital". [11]