Question

The addition made to the total product by employing one more labourer is called:

• A. Revenue product
• B. Total product
• C. Average product
• D. Marginal product

Hint:

Production Concepts (with Labor L as variable input): - Total Product (TP\(_L\)): Total output at a given level of L. - Average Product of Labor (AP\(_L\)): \( TP_L / L \). Output per worker. - Marginal Product of Labor (MP\(_L\)): Change in TP\(_L\) due to one additional unit of L (\( \Delta TP_L / \Delta L \)). Additional output from one more worker. - Law of Diminishing Marginal Returns: As more units of a variable input are added to fixed inputs, the marginal product of the variable input will eventually decline.

Answer 1

The Correct Option is D

Step 1: Define key concepts in production theory related to a variable input (like labor).
- Total Product (TP): The total quantity of output produced by a given amount of inputs (e.
g.
, with a certain number of laborers and fixed capital).
- Average Product (AP): The total product per unit of the variable input.
\( AP_L = \frac{TP}{L} \), where L is the amount of labor.
- Marginal Product (MP): The additional output produced by employing one more unit of a variable input, holding other inputs constant.
\( MP_L = \frac{\Delta TP}{\Delta L} \), or the derivative \( \frac{d(TP)}{dL} \) for continuous changes.
- Revenue Product: This relates to the revenue generated.
- Marginal Revenue Product (MRP): The additional revenue generated by employing one more unit of a variable input (\( MRP = MP \times MR \), where MR is marginal revenue).
- Average Revenue Product (ARP): Total Revenue / Quantity of variable input.

Step 2: Match the definition with the given phrase.
The phrase "The addition made to the total product by employing one more labourer" directly defines the Marginal Product of labor.

Step 3: Confirm the correct term.
The additional output from one more unit of labor is the marginal product.
This matches option (4).