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May 31, 2023

What is the link between marginal revenue product and wages? Due to there being discrepancies between the productivity and resource offerings (i.e., education, skills, experience) in labor markets, is it justified for one employee with a higher marginal revenue product to earn a higher wage than an employee with a lower marginal revenue product?

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Profit-maximizing firms will hire additional units of a resource up to the point at which the marginal revenue product (MRP) of the resource equals its price. With multiple inputs, firms will expand their use of each until the marginal product divided by the price (MP/P) is equal across all inputs

What is the link between marginal revenue product and wages? Due to there being discrepancies between the productivity and resource offerings (i.e., education, skills, experience) in labor markets, is it justified for one employee with a higher marginal revenue product to earn a higher wage than an employee with a lower marginal revenue product? Does this notion of marginal revenue product and wages conflict with minimum wage laws?

Review the mechanics of demand and supply. How does marginality work in economics?

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