Question

1. Why must the MPN curve be downward sloping? (MPN = Marginal Product of Labor) 2....

1. Why must the MPN curve be downward sloping? (MPN = Marginal Product of Labor)

2. Use a diagram to illustrate the impact on the production function where there is a negative supply shock. Label both axes and the curve.

3. Consider the following Production Function
Number of workers: Number of goods produced: MPN:
0 0
1 8
2 15
3 21
4 26
5 30
6 33

Find the MPN of each worker

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Answer #1

1.

Increase in output due to unit increase in labor input is known as Marginal product of Labor (MPN). This MPN is expressed as slope of production function which shows, with increase in labor input the amount of additional output that is gained from increase in additional labor input becomes smaller. This is known as Diminishing Marginal product of Labor. Due to this diminishing marginal product of Labor, if the MPN is graphed against no. Of Labor(or, labor use), the MPN curve must slope downward.

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