3.5 - MRP

Question 1

What is the MPL?

Answer 1

Marginal Product of Labour
Change in total output as result of hiring one more worker

Question 2

What is the MRP?

Answer 2

Marginal Revenue Product
Change in total revenue as result of hiring one more worker

Question 3

What are the benefits of the MRP model?

Answer 3

Optimum employment + DMR
Makes logical sense
Easier to balance costs
Easily altered

Question 4

What are the limitations of the MRP model?

Answer 4

Assumes equal pay + productivity
Estimates - may be flawed