![]() Following this, we have plotted Figure 1.Īs Figure 1 shows, a single worker produces 200, 2 workers produce 280, 3 workers produce 340, 4 workers produce 380, and 5 workers produce 400 wine glasses. Number of workersĪs initially indicated, the number of workers goes on the horizontal axis, whereas the quantity of output goes on the vertical axis. The production function of Jason's wine glass factory is shown in Table 3 below. Table 2 - Marginal product of labor example answer Marginal Product of Labor Curve Assuming all other inputs are fixed and only labor is variable, fill in the missing cells in Table 1 below. However, Jason wants to know the contribution each employee made to the number of wine glasses produced. Jason decided to increase the company's workforce from 1 to 3. Jason's company manufactures wine glasses. This tells the firm whether to keep adding employees or get rid of some employees. The question they ask here is, 'what contribution does each worker make to the firm's total output?' The answer to this lies in the marginal product of labor, which is the increase in the quantity of output as a result of adding an extra unit of labor. Every firm that requires employees must look at how its number of employees influences its quantity of output. To make the definition of the marginal product of labor easy to understand, let's first provide the reasoning behind it. But what is the marginal product of labor, and how do we figure it out? Read on to find out! Marginal Product of Labor Definition Would you not want to find out? Businesses want to know what each additional employee contributes to their overall output, and this is why they apply the marginal product of labor. Let's say you keep adding employees to a point where some of your employees are idle but take a salary at the end of the month. Would you not want to know the contribution each employee makes to your output? We would! And this contribution is what economists call the marginal product of labor. Let's say you are running a bakery and need employees. Price Determination in a Competitive Market.Market Equilibrium Consumer and Producer Surplus.Determinants of Price Elasticity of Demand.Cross Price Elasticity of Demand Formula.Effects of Taxes and Subsidies on Market Structures. ![]() Monopolistic Competition in the Short Run. ![]()
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