Can You Explain How A Firm's Production Function Is Related To Its Marginal Product Of Labor?


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Ellie Hoe answered

Since marginal product is the additional unit of output produced from the inclusion of additional inputs. If we add more labor into the production function the marginal product will directly be increased or decreased by the optimal increase or decrease of the labor. Marginal product of labor is change in output divided by change in labor. The labor itself is one of the most important elements of the production function which leads to economies and diseconomies of scale. Therefore we can say that there is a direct relationship between production function and marginal product of labor. Inclusion of labor to certain limit adds to the production efficiency and leads to economies of scale. However if labor is added indefinitely, the over use or excessive labor will start leading to inefficiencies and added costs; which would lead to diseconomies of scale. Therefore production manager should take care of inclusion of optimal number of labor in production function.

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