Editing Profit maximization (section)

==Marginal product of labor, marginal revenue product of labor, and profit maximization==

The general rule is that the firm maximizes profit by producing that quantity of output where marginal revenue equals [[marginal cost]]. The profit maximization issue can also be approached from the input side. That is, what is the profit maximizing usage of the variable input? <ref name="samuelson230">Samuelson, W and Marks, S (2003). p. 230.</ref> To maximize profit the firm should increase usage of the input "up to the point where the input's marginal revenue product equals its marginal costs".<ref>Samuelson, W and Marks, S (2003). p. 23.</ref> Mathematically, the profit-maximizing rule is <math>\text{MRP}_L = \text{MC}_L</math>, where the subscript <math>_L</math> refers to the commonly assumed variable input, labor.

The marginal revenue product is the change in total revenue per unit change in the variable input, that is, <math>\text{MRP}_L = \frac{\Delta \text{TR}}{\Delta L}</math>.

<math>\text{MRP}_L</math> is the product of marginal revenue and the marginal product of labor or <math>\text{MRP}_L = \text{MR} \cdot \text{MP}_L</math>.