Answer to Question #323790 in Microeconomics for rubaiya

Question

Explain how the marginal product of labour and the average product of labour change as the quantity of labour employed increases. Why does marginal product eventually diminish?

Answer 1

The marginal product of labor is the change in total product that results from a one-unit increase in the quantity of labor employed, with all other inputs remaining the same. The average product of labor is equal to total product divided by the quantity of labor employed.

Both of them will first increase and then decrease as the quantity of labour employed increases.