|Posted on April 14, 2014 at 8:00 PM|
Marginal revenue product is equal to the demand for an economic resource. The shift factors of the downward sloping marginal revenue product curve are:
1. Product price and demand - If there is an increase in product demand, then there is more demand for the economic inputs used to make the product.
2. Productivity of the resource - If a resource is more productive, the firm wants to hire more (not less) of those resources to maximize profit.
3. Prices of substitute resources - If the price of a substitute resource decreases, then there will be less demand for the other resource.
AP Microeconomics Unit 3 Resource Markets