WHY IS THE MARGINAL REVENUE PRODUCT CURVE A FIRMS DEMAND CURVE?
pohnpei397 Teacher Community / Jr. College Editor Emeritus Expert $(document).ready(function() { $(‘a.toggle_expert_titles’).click(function() { $(‘#show_expert_titles’).toggle(); return false; }); }); Best answer as selected by question asker. In this case, we are talking about perfect competition in buying things (factors) rather than in producing things. The marginal revenue product is defined as the change in total revenue that results from a given amount of change in the amount of a variable input used. The reason why a marginal revenue product curve is the same as the demand curve is because the MRP curve tells us how much money a firm can get from buying a certain amount of the factor. Once we know how much money the firm can make by buying that amount, we will know how much the firm is willing to pay for that amount.
