The marginal value product of labor measures:
A)the profit that a firm receives by selling the extra output made by an extra worker.
B)the addition made to total output by an additional worker.
C)the revenue a firm receives by selling the total output made by all workers.
D)the extra revenue earned by a firm selling the extra output made by an extra worker.

Question

Quizplus · Accepted Answer

The marginal value product of labor refers to the additional revenue a firm earns from selling the output produced by an additional worker. This concept is crucial in understanding how firms decide on the number of workers to employ, as it balances the cost of hiring an additional worker against the revenue generated from their work.

The Marginal Value Product of Labor Measures