Discuss the marginal productivity theory of wages. 

The marginal revenue productivity theory of wages is a theory in neoclassical economics stating that wages are paid at a level equal to the marginal revenue product of labor, MRP (the value of the marginal product of labor), which is the increment to revenues caused by the increment to output produced by the last laborer employed. 

In this model, it is assumed that the firm is profit-maximizing and workers will be hired up to the point when the marginal revenue product is equal to the wage rate. If the marginal revenue brought by the worker is less than the wage rate, then employing that laborer would cause a decrease in profit. 

The marginal revenue product of labour (MRPL) is the increase in revenue per unit increase in the variable input, i.e. labour. It is given by ∆TR/∆L. Now, marginal revenue increase in total revenue per unit increase of output quantity.

MR = ∆TR/∆Q

Similarly, marginal product of labour is increase in output quantity per unit increase of labour.

MPL = ∆Q/∆L

Now, 

MR x MPL = (∆TR/∆Q) x (∆Q/∆L) = ∆TR/∆L = MRP

The marginal revenue product (MRP) of a worker is equal to the product of the marginal product of labour (MP) and the marginal revenue (MR).