Chapter 11: Problem 1

Draw a graph that shows the usual relationship between the marginal product of labor and the average product of labor. Why do the marginal product of labor and the average product of labor curves have the shapes you drew?

Short Answer

Expert verified

The MPL and APL curves both initially rise due to increased productivity from additional labor. But they both begin to fall after reaching a certain point due to the law of diminishing returns where additional labor starts to reduce overall productivity. The MPL curve intersects the APL curve at its highest point, indicating that once MPL starts to fall, it brings down APL as well.

Step by step solution

Define the terms

Firstly, gather all the necessary definitions. The Marginal Product of Labor (MPL) is the additional output that can be created by adding an extra unit of labor. The Average Product of Labor (APL) is the total output divided by the total units of labor.

Draw the graph

Using these definitions, sketch a graph. On the X-axis, mark the quantity of labor. On the Y-axis, mark both the MPL and APL. Both curves typically follow the same path: They increase in the beginning and then start to decrease.

Draw the MPL curve

Draw the MPL curve. This curve initially rises due to gains from specialization when more labor is added, but it starts to fall eventually as the fixed quantity of other inputs (like land or capital) gets exhausted by the additional labor.

Draw the APL curve

Draw the APL curve. This curve generally takes the shape of an inverted-U. It rises in the beginning as additional labor leads to more average output. But, as more labor is employed, it starts to decline under the law of diminishing returns.

Explain the Intersection

The MPL curve intersects the APL curve at its maximum point. This is because when the marginal product of labor starts to fall, it pulls down the average product of labor.