How To Calculate Marginal Revenue Product Of Labor

The marginal product of labor is important because its a key variable in calculating the marginal revenue product of labor.

How to calculate marginal revenue product of labor. It depicts the additional output when 1 unit of labor or additional new employee hired or added to the firm. Formula to calculate marginal product of labor. Q n is the total production at time n q n 1 is the total production at time n 1. Marginal product is the ratio of change between an input usually labor or capital and an output usually units produced.

The formula for the marginal product of labor can be computed by using the following steps. Formula how to calculate marginal product marginal product change in output produced change in input. Formula to calculate marginal product. Marginal revenue product revision video marginal revenue product of labour mrpl is the extra revenue generated when an additional worker is employed formula for mrpl is.

Marginal product of labor d tp d l. The marginal product of labor is important because its a key variable in the calculation of the marginal revenue product of labor which is the change in total revenue rather than just total output when one additional employee is hired and all other factors remain constant. Where d tp is changed in total product or output. Mrpl marginal product of labour x marginal revenue.

The marginal revenue of the fourth unit of labor is 10 five units multiplied by 2 and the marginal revenue of the fifth unit of labor is 6 three units multiplied by 2. The formula for calculating the marginal product of labor mpl is represented as below. Thus the firm will hire four units of labor.