Marginal Productivity of Labor

The Marginal Productivity of Labor refers to the additional output produced when employing one more unit of labor, such as an extra worker. It highlights how productive that individual is in generating goods or services for a company. In the context of labor productivity, it helps businesses understand how effectively their workforce is contributing to output, influencing decisions on hiring or resource allocation. Essentially, it measures the value each new worker brings, guiding employers on the benefits of expanding their team to boost overall production and efficiency.