Labor productivity is a poor indicator of marginal product of labor.

Question

Quizplus · Accepted Answer

Labor productivity, which measures the output per worker or per hour worked, is actually a good indicator of the average product of labor rather than the marginal product of labor. The marginal product of labor refers to the additional output produced by adding one more unit of labor, which can differ from average productivity as it depends on specific circumstances and diminishing returns.

Labor Productivity Is a Poor Indicator of Marginal Product of Labor