Question

explain in your own 200 words

how is marginal revenue product of labor different from marginal product labor? how are the two related to each other?

Answer 1

Since marginal product of the labor is the change in the total product due to hiring an additional unit of labor. The shape of the marginal product of the labor is inverse U shape.

In the table form it is calculated as

MPL=TPn-TPn-1

When the production function is given, it is calculated as by taking the derivative of the production function with respect to L.

dQ/dL=MPL

It increases initially and after that it reaches at its maximum level, after that it starts decreasing and becomes zero and negative.

The marginal revenue product of labor is the product of marginal product of labor and Marginal revenue or Price.

In the equation form it can be expressed as

MRPL= MR*MPL

Here a imaginary data of labor, TP, MPL and MRPL are taken and it has been graphed for explantation.

As it can be seen in the diagram that both MPL and MRPL have shame shape inverse U shape.

Initially both MPL and MRPL curve increases and reaches at its maximum, then turns decreasing and continue to decrease. All this have been shown in the below diagram.