Marginal Revenue Product (MRP) Calculator

Formula

The formula to calculate Marginal Revenue Product (MRP) is:

\[ MRP = MPP \times MR \]

Where:

$ MRP $ is the Marginal Revenue Product ($)
$ MPP $ is the Total Number of Extra Goods Produced by One Unit of Labor
$ MR $ is the Marginal Revenue per Unit of the Goods Produced ($/unit)

What is Marginal Revenue Product (MRP)?

Marginal Revenue Product (MRP) is a measure of the additional revenue generated by hiring one more unit of labor. It helps businesses determine the value of increasing their workforce by quantifying the revenue contribution of an additional worker. In simple terms, MRP is the extra revenue a company can expect to earn from the goods produced by one more employee.

Example Calculation

Let's consider an example:

Total Number of Extra Goods (MPP): 300 units
Marginal Revenue (MR): $5 per unit

Using the formula to calculate Marginal Revenue Product:

\[ MRP = 300 \times 5 = 1500 \, \text{dollars} \]

This means that hiring one additional worker would generate an additional $1,500 in revenue for the company.