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MRP is additional revenue to the firm from additional output produced by employing and additional resource (e.g. labor).
As beatthecfa said, 'The MRP curve is the demand curve for a resource'.
Now, why MRP curve could be taken as demand curve for that resource?
This is because, firm will keep on employing additional labor till the price (wage) of employing that additional labor equals MRP from that labor. Thus MRP curve becomes demand curve of that resource for the firm. |
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