The marginal product of labor
A) measures how output changes as the wage rate changes.
B) is less than the average product of labor when the average product of labor is decreasing.
C) is negative when adding another unit of labor decreases output.
D) both a and b
E) both b and c

Question

Quizplus · Accepted Answer

The marginal product of labor (MPL) is defined as the additional output produced by adding one more unit of labor while holding all other inputs constant. Therefore, MPL measures how much output changes when one more worker is hired.

Option B is correct because the average product of labor (APL) is the total output divided by the number of workers. When APL is decreasing, it indicates that the MPL is less than the APL. This is because when the MPL is below the APL, adding more workers would decrease the average output per worker.

Option C is correct because if adding another unit of labor decreases output, then the MPL would be negative.

Therefore, the correct answer is E because both B and C are true statements about the marginal product of labor.

The Marginal Product of Labor