Question

What is the difference between the marginal product of labor and the marginal revenue product of labor for a firm in a perfectly competitive​ market?

Answer 1

The marginal revenue product of labor is equal to the marginal product of labor multiplied by the product price. The formula is:

• MRP = MPL x P

The marginal product of labor is the additional output that can be achieved by adding an additional unit of labor. The marginal revenue product of labor measures the same thing but in money, not units.