Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved
Because the MRP is the demand curve for a factor of production we can read from it how many units of the factor the firm will hire, N at the going cost per unit of the factor W.
The demand curve for inputs is downward sloping because of diminishing marginal product, and for firms in imperfect competition it is also downward sloping due to diminishing marginal revenue.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved