No Bull Economics Lessons

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