Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 18 - Part VI - The Markets for the Factors of Production - Questions for Review - Page 391: 1

Answer

A firm's production function uses the marginal product of labor in the graph of the production function.

Work Step by Step

The marginal product of labor is the change in the quantity produced (the marginal product) divided by the change in the quantity of labor. Thus, the marginal product of labor uses the marginal product in its calculation. A firm's value of marginal product decreases as more workers are hired (the firm's demand for labor). Eventually, there is a point where the marginal product is negative, and a firm will not hire a worker with a negative marginal product.
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