The marginal product of labor is equal to total product divided by the number of worker-weeks. A. True B. False
The correct answer and explanation is:
Correct Answer: B. False
Explanation:
The marginal product of labor (MPL) is not equal to the total product divided by the number of worker-weeks. That description actually defines the average product of labor (APL).
Let’s clarify the two terms:
- Marginal Product of Labor (MPL):
This is the additional output (or product) that is produced as a result of adding one more unit of labor, holding all other inputs constant.
Formula: MPL=ΔTotal ProductΔLabor\text{MPL} = \frac{\Delta \text{Total Product}}{\Delta \text{Labor}} For example, if hiring an additional worker increases output from 100 to 120 units, then the marginal product of that worker is 20 units. - Average Product of Labor (APL):
This is the total output divided by the number of labor units (worker-weeks, workers, or hours).
Formula: APL=Total ProductQuantity of Labor\text{APL} = \frac{\text{Total Product}}{\text{Quantity of Labor}}
Why This Distinction Matters:
In production theory, distinguishing between marginal and average product helps firms make hiring decisions:
- If MPL > APL, then hiring an additional worker increases the average output per worker.
- If MPL < APL, hiring more workers will reduce the average output per worker.
- If MPL = APL, then APL is at its maximum.
Thus, the marginal product helps identify the most productive use of labor at the margin, which is crucial for maximizing efficiency and profit.
Conclusion:
Saying that the marginal product of labor equals total product divided by labor confuses marginal with average. Hence, the statement is False.