In marginal analysis, the marginal revenue product (MRP) of an input is defined as:

• A. The difference between total revenue and total cost
• B. The total revenue divided by the total number of inputs used
• C. The additional revenue generated from employing one more unit of the input
• D. The additional cost incurred from producing one more unit of output

Answer: (C)

Verified step by step guidance

1. Understand the concept of Marginal Revenue Product (MRP): it measures the additional revenue a firm earns by employing one more unit of a specific input, holding other inputs constant.
2. Recall that MRP is calculated by multiplying the Marginal Product (MP) of the input by the Marginal Revenue (MR) obtained from selling the additional output produced by that input.
3. Express this relationship mathematically as: \(\text{MRP} = \text{MP} \times \text{MR}\), where MP is the change in output from one additional unit of input, and MR is the additional revenue from selling one more unit of output.
4. Recognize that MRP is not simply the difference between total revenue and total cost, nor is it total revenue divided by total inputs; it specifically focuses on the incremental revenue from one more input unit.
5. Conclude that the correct definition of MRP is the additional revenue generated from employing one more unit of the input.