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FACTOR DEMAND AND MARGINAL REVENUE PRODUCT: For a firm that hires the services of a factor in a perfectly competitive factor market, the factor demand curve is that portion of the marginal revenue product curve that lies below the average revenue product curve. The relation between marginal revenue product and factor demand for a perfectly competitive firm is comparable to the relation between marginal cost and short-run supply. A perfectly competitive firm maximizes profit by hiring the quantity of a factor that equates factor price and marginal revenue product. As such, the firm moves along it's marginal revenue product curve in response to alternative factor prices.
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MARGINAL REVENUE The change in total revenue resulting from a change in the quantity of output sold. Marginal revenue indicates how much extra revenue a firm receives for selling an extra unit of output. It is found by dividing the change in total revenue by the change in the quantity of output. Marginal revenue is the slope of the total revenue curve and is one of two revenue concepts derived from total revenue. The other is average revenue. To maximize profit, a firm equates marginal revenue and marginal cost.
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PINK FADFLY
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Today, you are likely to spend a great deal of time browsing through a long list of dot com websites wanting to buy either a rim for your spare tire or decorative celebrity figurines. Be on the lookout for attractive cable television service repair people.
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Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
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"Never confuse a single defeat with a final defeat." -- F. Scott Fitzgerald, writer
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SBDC
Small Business Development Center
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