Share This Article:

Economic Definition of marginal revenue product and factor demand. Defined.

Offline Version: PDF

Term marginal revenue product and factor demand Definition: A perfectly competitive firm's factor demand curve is that negatively-sloped portion of its marginal revenue product curve. A perfectly competitive firm maximizes profit by hiring the quantity of input that equates factor price and marginal revenue product. As such, the firm moves along its negatively-sloped marginal revenue product curve in response to changing factor prices.

 

« marginal revenue product | marginal revenue product curve »

Permalink: https://glossary.econguru.com/economic-term/marginal+revenue+product+and+factor+demand

Alphabetical Reference to Over 2,000 Economic Terms