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How is a firm’s production function related to its marginal product of labor? How is a...

How is a firm’s production function related to its marginal product of labor? How is a firm’s marginal product of labor related to the value of its marginal product? How is a firm’s value of marginal product related to its demand for labor? Provide specific examples to support your answers.

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Answer #1

The slope of production function is marginal product of labor. That is increase in total product with every one unit increase in labour is nothing but marginal product of labpl

Marginal product of labor is the differentiation is production function with respect to labor.

Value of marginal product is the product of marginal product of labor and output price.

Demand for labour is determined by value of marginal product. If value of marginal product increases demand for labor increases. This determines wage rate.

w= P.MPL= MPR

Where P is Price of output and MPL is marginal product of labor. MPR is value of marginal product.

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