Perfectly Competitive Case.
It is easy to calculate marginal revenue product when product markets are perfectly competitive. In this case, each unit of the worker’s marginal product (MPL) can be sold at
the competitive output price (P). Moreover, since we are considering perfect competition, the output price is unaffected by the firm’s output, and price therefore equals marginal revenue (MR). If we have an MPL of 10,000 bushels and a price and MR of $3, the dollar value of the output produced by the last worker-the marginal revenue product of labor (MRh)-is $30,000 (equal to 10,000 X $3). This is shown in column (5) of Table 12-3′.Hence, under
perfect competition, each worker is worth to the firm the dollar value of the last worker’s marginal product; the value of each acre of land is the mar- . ginal product of land times the output price; and so forth for each factor.
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