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Marginal Product of Labour (MPL) Calculator

The extra output produced by adding one more unit of labour.

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Marginal Prod

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Overview

The Marginal Product of Labour represents the additional output generated when a firm adds one unit of labour, such as a work-hour or an employee, while keeping other production factors constant. It is a vital metric for understanding the efficiency of a production system and determines the slope of the total product curve.

Symbols

Variables

MP = Marginal Prod, TP = Change in TP, L = Change in L

MP
Marginal Prod
units
Change in TP
units
Change in L
workers

Apply it well

When To Use

When to use: Apply this equation when a manager needs to decide if hiring an additional worker will contribute positively to the company's output goals. It is specifically intended for short-run scenarios where capital assets, like machinery and workspace, are fixed and cannot be changed immediately.

Why it matters: This concept is the foundation for the law of diminishing marginal returns, which dictates that adding more of one factor will eventually lead to lower per-unit returns. It allows businesses to calculate the profit-maximizing level of employment by comparing marginal productivity to the cost of wages.

Avoid these traps

Common Mistakes

  • Confusing marginal product with average product.

One free problem

Practice Problem

A bakery increases its staff from 5 to 7 bakers. As a result, daily bread production increases from 100 loaves to 150 loaves. Calculate the Marginal Product of Labour for these additional workers.

Change in TP50 units
Change in L2 workers

Solve for: MP

Hint: Subtract the initial labor and product from the new totals to find the change (Δ) for each.

The full worked solution stays in the interactive walkthrough.

References

Sources

  1. Mankiw, N. Gregory. Principles of Economics.
  2. Wikipedia: Marginal product of labor
  3. Britannica: Marginal product
  4. Mankiw, N. Gregory. Principles of Economics. 9th ed. Cengage Learning, 2021.
  5. Samuelson, Paul A., and William D. Nordhaus. Economics. 19th ed. McGraw-Hill Education, 2010.
  6. Sloman, John, Dean Garratt, and Alison Wride. Economics. 11th ed. Pearson Education Limited, 2021.
  7. McConnell, Campbell R., Brue, Stanley L., and Flynn, Sean M. Economics: Principles, Problems, and Policies.
  8. Pindyck, Robert S., and Rubinfeld, Daniel L. Microeconomics.