Tuesday, June 12, 2007

SOWWIE CAN YOU PLEASE QUICKLY RUN OVER THE SUPPLY FACTORS FOR THE MRP AND THEIR RELEVANCE ?



MRP is about the demand for labour, not the supply

MRP = Marginal Revenue Product.

MRP = MPP * MR

MRP depends on the productivity of workers and Price (marginal revenue) of the good produced. Therefore, Labour demand is a derived demand.

Wages are determined by both demand (MRP) and Supply.
  • Supply of labour depends on things like
  • number of qualified workers
  • Time taken for qualifications
  • Non monetary benefits e.t.c

Wage determination

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