The production function and the Marginal Product of labor The production function illustrates the relationship between the quantity of inputs used and the quantity of output of a good
The Production Function and The Marginal Product of Labor • The production function illustrates the relationship between the quantity of inputs used and the quantity of output of a good
How the Competitive Firm Decides How Much labor to hire Marginal Product value of the of Labor Marginal Product Marginal Profit L abor Output MPL of Labor Wage [A Profit= VMPL-w L Q MPL=△Q/△ ⅤMPL= PXMPL 01 0 1001005100 500 $500 180 80 800 $500 300 2345 240 60 $600 $500 $100 280 40 $400 $500 $100 30020 $ 200 $500 3
Labor L Output Q Marginal Product of Labor MPL Value of the Marginal Product of Labor VMPL=PxMPL Wage W Marginal Profit 0 0 1 100 100 $1,000 $500 $500 2 180 8 0 $800 $500 $300 3 240 6 0 $600 $500 $100 4 280 4 0 $400 $500 -$100 5 300 2 0 $200 $500 -$300 D Pr ofit = VMPL- W MPL = D Q/ D L How the Competitive Firm Decides How Much Labor to Hire
The Production function 350 300· 日温■ 250 子200 150 画■■■■ 100·““ 50 0 Quantity of Apple Pickers
0 0 50 100 150 200 250 300 350 0 1 2 3 4 5 6 Quantity of Apple Pickers Quantity of Apples 1 2 3 4 5 The Production Function
T he production function and The Marginal Product of Labor The marginal product of labor is the increase in the amount of output from an additional unit of labor MPL=△Q△L MPL=(Q2-Q1)(L2-L1)
The Production Function and The Marginal Product of Labor • The marginal product of labor is the increase in the amount of output from an additional unit of labor. • MPL = DQ/DL • MPL = (Q2 – Q1)/(L2 – L1)
Diminishing Marginal Product of labor as the number of workers increases, the marginal product of labor declines As more and more workers are hired, each additional worker contributes less to production than the prior one The production function becomes flatter as the number of workers rises
Diminishing Marginal Product of Labor • As the number of workers increases, the marginal product of labor declines. • As more and more workers are hired, each additional worker contributes less to production than the prior one. • The production function becomes flatter as the number of workers rises