Question

Microeconomics

Posted 6 months ago

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When Priya added one more worker, she noticed that her average product of labor $\left(A P_{L}\right)$ increased, and if she adds yet another worker her $A P_{L}$ increases again.
What MUST also be true about the marginal product of labor $\left(M P_{L}\right)$ based on this information?
Choose 1 answer:
(A) $M P_{L}$ is less than $A P_{L}$.
(B) $M P_{L}$ equals $A P_{L}$.
(c) $M P_{L}$ is greater than $A P_{L}$.
(D) $M P_{L}$ is negative.
(E) $M P_{L}$ equals zero.
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Answer from Sia

Posted 6 months ago

Solution

a

Definition of Average Product of Labor: The average product of labor ($AP_L$) is the total output produced by workers divided by the number of workers

b

Definition of Marginal Product of Labor: The marginal product of labor ($MP_L$) is the additional output produced by adding one more worker

c

Relationship Between $AP_L$ and $MP_L$: When $AP_L$ is increasing, it means that the additional worker is producing more than the average output of the previous workers. Therefore, $MP_L$ must be greater than $AP_L$

Answer

(C) $MP_L$ is greater than $AP_L$.

Key Concept

Relationship between $AP_L$ and $MP_L$

Explanation

When the average product of labor ($AP_L$) increases with the addition of more workers, it indicates that the marginal product of labor ($MP_L$) is greater than the average product of labor ($AP_L$). This is because the new worker is contributing more to the total output than the average of the previous workers.

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