The marginal revenue productivity theory of wages is a model of wage levels in which they set to match to the marginal revenue product of labor, (the value of the marginal product of labor), which is the increment to revenues caused by the increment to output produced by the last laborer employed. In a model, this is justified by an assumption that the firm is profit-maximizing and thus would employ labor only up to the point that marginal labor costs equal the marginal revenue generated for the firm. This is a model of the neoclassical economics type. The marginal revenue product of a worker is equal to the product of the marginal product of labour (the increment to output from an increment to labor used) and the marginal revenue (the increment to sales revenue from an increment to output): . The theory states that workers will be hired up to the point when the marginal revenue product is equal to the wage rate. If the marginal revenue brought by the worker is less than the wage rate, then employing that laborer would cause a decrease in profit. The idea that payments to factors of production equal their marginal productivity had been laid out by John Bates Clark and Knut Wicksell in simpler models. Much of the MRP theory stems from Wicksell's model. (Wikipedia).
Section (2.7) Marginal Analysis
Applied Calculus – Section (2.7) Marginal Analysis This lecture defines marginal cost, revenue, and profit. We use the derivative to evaluate marginal change at a specified level of production and compare the result to the exact monetary change when production increases by one unit. Then w
From playlist Applied Calculus
In this video we cover the idea of marginal cost. This is simply the derivative of the cost function. We can roughly define marginal cost as the cost of producing one additional item. For more videos please visit http://www.mysecretmathtutor.com
From playlist Calculus
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From playlist Applications of Differentiation – Maximum/Minimum/Optimization Problems
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From playlist Courses and Series
Lec 18 | MIT 14.01SC Principles of Microeconomics
Lecture 18: Factor Markets Instructor: Jon Gruber, 14.01 students View the complete course: http://ocw.mit.edu/14-01SCF10 License: Creative Commons BY-NC-SA More information at http://ocw.mit.edu/terms More courses at http://ocw.mit.edu
From playlist MIT 14.01SC Principles of Microeconomics
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From playlist IIT Madras: History of Economic Theory | CosmoLearning.org Economics
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MIT 14.01 Principles of Microeconomics, Fall 2018 Instructor: Prof. Jonathan Gruber View the complete course: https://ocw.mit.edu/14-01F18 YouTube Playlist: https://www.youtube.com/playlist?list=PLUl4u3cNGP62oJSoqb4Rf-vZMGUBe59G- This lecture continues to explore factor markets, using min
From playlist MIT 14.01 Principles of Microeconomics, Fall 2018
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MIT 14.01 Principles of Microeconomics, Fall 2018 Instructor: Prof. Jonathan Gruber View the complete course: https://ocw.mit.edu/14-01F18 YouTube Playlist: https://www.youtube.com/playlist?list=PLUl4u3cNGP62oJSoqb4Rf-vZMGUBe59G- This lecture covers factor markets, the markets that set th
From playlist MIT 14.01 Principles of Microeconomics, Fall 2018
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From playlist Courses and Series
Thank you for watching my econ videos. In an AP or introductory college microeconomic course you must draw, shift, and explain a bunch of graphs, including: supply and demand, perfect competition, monopoly, monopolistic competition, monopsony, externalities and more. In this video I explai
From playlist Micro Unit 6: Market Failure and the Government
The Push-Up Machine - Labor Market Activity
This is a great activity to simulate the labor market and show how a business decides how many workers to hire. Watch the video and see if you can figure out the following: 1. How many workers should be hired to maximize profit? 2. What output should be produced to maximize profit? 3. How
From playlist Micro Unit 5: Factor (Resource) Markets
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In this video, I go into the formal model of Monopsony in more detail. As you would expect, a less competitive buyer's market means a better price for the buyer -- in this case, lower wages for workers (and fewer workers hired). "(THE LOST EPISODES) Monopsony Factor, Perfectly Competitiv
From playlist Microeconomics modules
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From playlist IIT Madras: History of Economic Theory | CosmoLearning.org Economics
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How many people to hire given the MPR curve | Microeconomics | Khan Academy
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From playlist Factor markets | AP Microeconomics | Khan Academy
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