Determine the value of the marginal product of labor, Microeconomics

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Determine the value of the marginal product of labor.

Equilibrium in the Labor Market

Each firm will hire labor up to the point at that the value of the marginal product of labor is equivalent to the equilibrium wage rate as:

VMPL = Wage or MRP = Wage (AP)

Into equilibrium, the marginal product of labor will be similar for all employers.

Therefore the equilibrium or market wage rate is equivalent to the equilibrium value of the marginal product.

a. The market labor demand curve is the horizontal total of the individual labor demand curves of all makers.

b. Labor is paid its equilibrium value of the marginal product, the value of the marginal product of the previous worker hired into the labor market like a whole.


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