marginal revenue product


The additional revenue generated by the extra output from employing one more unit of a factor of production. In a competitive industry this equals the marginal value product, but with imperfect competition it is smaller, due to the implied price reduction. Determines factor prices in competitive factor markets.

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You need to know if you are producing a marginal revenue product and see how you can make it a better earner.

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By adding the new equipment and improving their process they were hoping for a very high return in their marginal revenue product.

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The marginal revenue product was important to learn about and we realized that it was additional revenue for everyone in the company.

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