Differences in marginal revenue products among workers can help explain the presence of wage differentials.

Question

Quizplus · Accepted Answer

Marginal revenue product (MRP) is the additional revenue generated by hiring an additional worker. If a worker's MRP is higher than another worker, the employer has an incentive to pay that worker a higher wage to retain their services. Therefore, differences in MRP among workers can help explain why some workers are paid more than others.

Differences in Marginal Revenue Products Among Workers Can Help Explain