The value of the marginal Product of labor The value of the marginal product is the marginal product of the input multiplied by the market price of the output VMPI=MPI XP The value of the marginal product is measured in dollars o It diminishes as the number of workers rises because the market price of the good is constant
The Value of the Marginal Product of Labor • The 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 is measured in dollars. • It 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 TP o maxim lize profit, the competitive P rofit-maximizin g firm hires workers u P to the point where the value of marginal product of labor equals the wage VMPL= Wage The value-of-marginal-product curve is the labor demand curve for a competitive profit-maximizing firm
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 • The value-of-marginal-product curve is the labor demand curve for a competitive, profit-maximizing firm
The value of the Marginal Product of labor Value of the Marginal Product Market… wage Value of marginal product (demand curve for labor 0 Profit-maximizing Quantity of quantity Apple Pi ckers
0 Quantity of Apple Pickers Value of the Marginal Product Value of marginal product (demand curve for labor) Market wage Profit-maximizing quantity The Value of the Marginal Product of Labor