In other words, with the marginal product of labor, just the number of labor changes, not any other factor involved in the production.įor example, with our factory manager, if you want to determine the marginal product of labor, you could employ one more worker to see whether additional labor increases the number of cars you can manufacture adequately, or whether it is appropriate to hire more employees to meet your quota. It is important to remember that all the other factors remain constant. What is the Marginal Product of Labor?Ī marginal labor product is a change in output when additional labor is added, such as when an extra employee is employed. In these situations, companies can only figure out the final output by deducting the previous quantity or level of production from the current level of production. The marginal product formula can be determined by calculating the change in the quantity produced or the change in the level of production and then dividing the same by the change in the factor of production.įor most cases, the denominator is 1 as the formula that was initially formulated was based on an increment of every 1 unit in the production factor.
How to calculate Marginal Product of labor Example.
