Describe MRPL and profit maximisation, Managerial Economics

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Q. Describe MRPL and profit maximisation?

The common rule is that firm maximises profit by producing that quantity of output where marginal revenue equals marginal costs. Profit maximisation issue can also be approached from the input side. Which is, what is the profit maximising usage of the variable input? To maximise profits, firm must increase usage 'up to the point where the input's marginal revenue product equals its marginal costs'. So arithmetically the profit maximising rule is MRPL = MCL. The marginal revenue product is the change in total revenue per unit change in variable input- presuming input as labour. Which is MRPL = ?TR/?L.


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