In order to calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the wage rate of the worker

Economics Dec 15, 2020

In order to calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the wage rate of the worker. True or false?

Expert Solution

Answer: False

To calculate the value of the marginal product of labor you need the marginal product of labor and price. This is because the the value added of each worker is at least as much as their wage. For example, assume a worker gets paid $10 for an hour of work and produces 5 units of output each sold for $3. This means the value of the marginal product of labor is 5*3=$15. We do not need wages.

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