ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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.

Detailed explanation-2: -The marginal product of labor (or MPL) refers to a company’s increase in total production when one additional unit of labor is added (in most cases, one additional employee) and all other factors of production remain constant.

Detailed explanation-3: -Relationship between Marginal Product and Total Product When the Marginal Product (MP) increases, the Total Product is also increasing at an increasing rate. This gives the Total product curve a convex shape in the beginning as variable factor inputs increase.

Detailed explanation-4: -Marginal Product is the defined as the change in total product resulting from one additional unit of a variable factor. For output to be maximized the marginal product should be 0. As if marginal product ≥ 0 it is profitable to increase production. If marginal product ≤ 0 it is profitable to decrease production.