The Marginal Product of Labor II

The marginal product of labor or MP_L is calculated as the quotient of change in the quantity of output to change in the quantity of labor while keeping other inputs constant.

Consider the schedule showing the MP_L of labor in an orchard producing mangoes.

The first worker picks 200 mangoes in a day, which is the total output of one worker. The output goes up to 360 after the second worker is hired. MP_L is 160 at this stage.

Due to the law of diminishing marginal product, MP_L declines with the hiring of each new worker. Note that diminishing MP_L does not arise from any differences in the quality of labor across workers. All hired workers are assumed to be equally skilled.

Graphically, the number of workers is plotted on the x-axis and the MP_L on the y-axis.

The MP_L curve starts from the point when the firm employs one worker. It shows the downward-sloping marginal product of labor as more workers are added.

MP_L is also known as the marginal physical product of labor or MPP_L, as it shows the additional physical units of the product manufactured.