The Marginal Product of Labor I

The marginal product of labor, or MP_L, is the additional output that results from adding one more unit of labor, holding all other inputs constant.

For example, in a mango orchard, two workers harvest 360 mangoes in a day.

The orchard hires another mango picker, and the output rises to 480 per day. So, the marginal product of the newly hired worker is 120.

Also, the firm experiences the law of diminishing marginal product, which means that as more labor is added, the additional output gained from each new worker decreases.

Initially, a worker can easily pick the most accessible mangoes, such as those hanging lower on the tree.

As the number of workers increases, the most accessible mangoes become depleted. So, an additional worker must make more effort to pick mangoes, such as climbing higher into the trees. This extra effort means that each new worker adds less to the total output than the one hired earlier, illustrating the law of diminishing marginal product.