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What are the determinants of marginal revenue product?

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

Categories: AP Microeconomics, Micro Unit 3 Resource Markets

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