Diminishing Marginal Product of labor e As the number of workers increases. the marginal product of labor declines. e As more and more workers are hired each additional worker contributes less to production than the prior one. o The production function becomes flatter as the number of workers rises This property is called diminishing marginal product H arc Inc items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Diminishing Marginal Product of Labor u As the number of workers increases, the marginal product of labor declines. u As more and more workers are hired, each additional worker contributes less to production than the prior one. u The production function becomes flatter as the number of workers rises. This property is called diminishing marginal product
The production Function 350 3001“5 250 200 150 100 ■■■■■■■ ■■■■■■■ 0 Quantity of Apple Pickers H arc Inc items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Production Function... 0 0 50 100 150 200 250 300 350 0 1 2 3 4 5 6 Quantity of Apple Pickers Q u a n tit y o f A p ple s 1 2 3 4 5
The value of the Marginal Product of labor e The value of the marginal product is the marginal product of the input multiplied by the market price of the output Ww几= MPLXP H arc Inc items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Value of the Marginal Product of Labor uThe value of the marginal product is the marginal product of the input multiplied by the market price of the output. VMPL = MPL X P
The Value of the Marginal Product of labor o The value of the marginal product is measured in dollars sIt diminishes as the number of workers rises because the market price of the good is constant. H arc Inc items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Value of the Marginal Product of Labor uThe value of the marginal product is measured in dollars. uIt diminishes as the number of workers rises because the market price of the good is constant
The value of the Marginal product and the demand for labor To maximize profit, the competitive, profit-maximizing firm hires workers up to the point where the value of marginal product of labor equals the wage. VMPL Wage H arc Inc. items and derived items c ht o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Value of the Marginal Product and the Demand for Labor uTo maximize profit, the competitive, profit-maximizing firm hires workers up to the point where the value of marginal product of labor equals the wage. VMPL = Wage