The MRP curve for a factor is the firm's demand curve for that factor.

    W represents the unit cost of the input. If MRP is the demand curve N* units should be hired. If, instead N1 units are hired the firm gives up profits equal to the shaded area, because the added units between N1 and N* add more to revenue than to costs, so the firm should continue hiring as long as MRP1 > W.

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