Marginal product theory Watch

Byrney11
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Report Thread starter 7 years ago
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Im revising for my Alevel and im sure if i understand marginal productivity theory and have the right end of the stick.

From what i gather is that it occurs in perfect competition, where
all workers are homogeneous
there is perfect knowledge
there are numerous buyers and sellers of workers

If a firm makes wages lower than the market, then due to perfect knowledg, workers will not work there. This therefore makes marginal cost constant.

In the short run a firm will produce up until the point that MRP=MC to make normal profit. (MRP being MR*MP)

is this right, because i feel that my understanding is mixed

thanks
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