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Unformatted text preview: output that it produces i.e. its Total Product, denoted by TP is a function of two variables: capital, denoted by K , and labor, denoted by L . + , 5 . 5 . L K L , K TP So what is the Marginal Product of Labor, denoted MPL ? Marginal Product of Labor is the change in Total Product caused by an increase in Labor input. Marginal Product of Labor is the derivative of Total Product with respect to Labor. Notice that were looking solely at the change in Total Product that occurs when we vary the Labor input. Were not changing the capital stock, so when we take the derivative of Total Product with respect to Labor, well hold the firms capital stock is fixed i.e. well hold it constant . + , + , 5 . 5 . 5 . 5 . L K 5 . L d L K, TP d MPL L K L , K TP o Page 21...
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- Fall '10