Contents

- 1 What happens when the marginal product of labor rises?
- 2 Why does marginal product of labor increase then decrease?
- 3 How does the marginal product of labor change?
- 4 Why does MPL rise initially?
- 5 What is the marginal product of Labour equal to?
- 6 What is the marginal product of the 2nd worker?
- 7 How do you know if marginal product is increasing?
- 8 What happens when marginal product decreases?
- 9 When total product is maximum marginal product is?
- 10 What is marginal product with example?
- 11 When marginal product is falling What happens to marginal cost?
- 12 What are the causes and effects of increasing marginal returns?
- 13 What is the relationship between MPL and MC?
- 14 What happens to marginal product when total product is increasing but at a decreasing rate?
- 15 What two factors affect the demand for labor?

## What happens when the marginal product of labor rises?

When the **marginal product of labor** curve **rises**, the firm experiences increasing **marginal** returns, that is the **marginal product** of an additional worker exceeds the **marginal product** of the previous worker. At this time, the rate of increase in total **product** is accelerating.

## Why does marginal product of labor increase then decrease?

Your factory’s diminishing **marginal product** means the beneficial effect of adding new **workers** is **decreasing**. This is known as the law of diminishing returns: In any fixed **production** scenario, adding inputs eventually causes the **marginal product** to fall.

## How does the marginal product of labor change?

**How does the Marginal Product of Labor change** as more **workers** are hired? The **marginal product of labor** produces an increase in output for the company because the **labor** has increased. – as the **labor** increases the output decreases because there are too many **workers** and not enough capital to go around.

## Why does MPL rise initially?

In the “law” of diminishing marginal returns, the marginal product **initially increases** when more of an input (say labor) **is** employed, keeping the other input (say capital) constant. The reason behind this **is** the diminishing marginal productivity of labor.

## What is the marginal product of Labour equal to?

The **marginal** revenue **product** of a worker is **equal** to the **product** of the **marginal product of labor** (MPL) and the **marginal** revenue (MR) of output, given by MR×MP: = MRPL. This can be used to determine the optimal number of workers to employ at an exogenously determined market wage rate.

## What is the marginal product of the 2nd worker?

**Marginal product** is the additional output that is generated by an additional **worker**. With a **second worker**, **production** increases by 5 and with the third **worker** it increases by 6. When these **workers** are added, the **marginal product** increases.

## How do you know if marginal product is increasing?

You can **determine if** the **marginal product** of an input is **increasing**, decreasing, or constant by looking how the MP reacts to a change in that input. That is easiest to **find out** by taking a derivative of the **marginal product** with respect to the input in question.

## What happens when marginal product decreases?

Diminishing **marginal productivity** can potentially lead to a loss of profit after breaching a threshold. If diseconomies of scale occur, companies don’t see a cost improvement per unit at all with **production increases**. Instead, there is no return gained for units produced and losses can mount as more units are produced.

## When total product is maximum marginal product is?

When **marginal product** of a factor is zero then **total product** will be **maximum**.

## What is marginal product with example?

A good **example** of the **marginal product** of labor is a kitchen in a restaurant. With no cooks, the restaurant’s **production** will be 0. When one cook is hired, the restaurant’s **production** may increase to 10 meals, yielding a positive MPL of 10.

## When marginal product is falling What happens to marginal cost?

∆L∕∆Q (the change in quantity of labor to effect a one unit change in **output**) = 1∕MP_{L}. Thus if the **marginal product** of labor is rising then **marginal costs** will be **falling** and if the **marginal product** of labor is **falling marginal costs** will be rising (assuming a constant wage **rate**).

## What are the causes and effects of increasing marginal returns?

**Increasing marginal returns** occurs when the addition of a variable input (like labor) to a fixed input (like capital) enables the variable input to be more productive. In other words, two workers are more than twice as productive as one worker and four workers are more than twice as productive as two workers.

## What is the relationship between MPL and MC?

**MC** = w / **MPl**. The higher the marginal product of labor, i.e., the more productive labor is, the lower the marginal costs of producing output.

## What happens to marginal product when total product is increasing but at a decreasing rate?

If the **total product** curve rises at an **increasing rate**, the **marginal product** of labor curve is positive and **rising**. If the **total product** curve rises at a **decreasing rate**, the **marginal product** of labor curve is positive and falling.

## What two factors affect the demand for labor?

**Factors** that can shift the **demand** curve for **labor** include: a change in the quantity demanded of the product that the **labor** produces; a change in the production process that uses more or less **labor**; and a change in government policy that **affects** the quantity of **labor** that firms wish to hire at a given wage.