In a perfectly competitive output market, the marginal revenue product (MRP) of an input is determined by the additional revenue generated from employing one more unit of that input, holding all else constant. It is calculated by multiplying the marginal product (MP) of the input by the price of the output. Since firms are price takers, the price of the output remains constant regardless of the quantity produced. Therefore, the MRP reflects the value added by the input in terms of revenue generated from selling the additional output produced.
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