Marginal Product of Labor Explained

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Question:

The marginal product of labor is the increase in a firm's revenues created by hiring an additional laborer.

False

True

Answer:

False

The marginal product of labor (MPL) refers to the additional output produced by employing one more unit of labor, not the increase in a firm's revenues. The increase in revenues generated by hiring an additional laborer would be related to the marginal revenue product of labor (MRP), which takes into account both the MPL and the price at which the output is sold.