Definition
- Marginal revenue product
- The marginal revenue product of labour is the marginal product of one more worker multiplied by the marginal revenue from selling that output.
- Not to be confused with: Derived demand
- Derived demand is the demand for an input such as labour, which depends on the demand for the product the firm is producing.
Test yourself
What is the difference between marginal revenue product and derived demand?
Derived demand: Derived demand is the demand for an input such as labour, which depends on the demand for the product the firm is producing.