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The formula for calculating marginal revenue productivity is as follows



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Microeconomics Masharipov Odilbek term paper

The formula for calculating marginal revenue productivity is as follows:

MRP = MPP * MR

Where MRP = Marginal Revenue Productivity

MR= Marginal Revenue



iii. Value of Marginal Productivity:

Refers to the value obtained by multiplying marginal physical productivity with the price of product produced. According to Ferguson, “The value of marginal product of a variable factor is equal to its marginal product multiplied by the market price of the commodity in question.”



The formula of value of marginal productivity is as follows:

VMP = MPP* AR

Where, VMP = Value of marginal productivity

MPP = Marginal physical productivity

AR = Market price of product

Let us understand the concept of value of marginal productivity with the help of an example. Suppose the market price of wheat is Rs. 10 per quintal and the marginal physical productivity for the additional labor is four quintals of wheat. In such a case, the value of marginal productivity for the additional labor would be Rs. 40 (4*10=40).




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