Which of the following statements regarding comparisons of productivity across two firms is true? A) The firm with the higher AP_L is the more productive firm. B) The firm with the higher MP_L is the more productive firm. C) The firm with the lower MP_L is the more productive firm. D) The average product of labor can vary with the choice of inputs and the level of outputs, so the firm with the higher AP_L may not be the most productive.

Question

Quizplus · Accepted Answer

The average product of labor (AP_L) is a measure of productivity, but it can vary with the choice of inputs and the level of outputs. Therefore, it is possible for a firm with a lower AP_L to be more productive than a firm with a higher AP_L. The marginal product of labor (MP_L) is also a measure of productivity, but it only considers the additional output generated by the last unit of labor. It is not necessarily a better indicator of overall productivity than the average product of labor.

Which of the Following Statements Regarding Comparisons of Productivity Across