AP_Krugman_Textbook

module 69 Introduction and Factor Demand 683

numbers behind the figure. Note: sometimes the marginal product (MP) is called the
marginal physical product orMPP. These two terms are the same; the extra “P” just em-
phasizes that the term refers to the quantity of physical output being produced, not
the monetary value of that output.
If workers are paid $200 each and wheat sells for $20 per bushel, how many workers
should George and Martha employ to maximize profit?

MPL

6543210 78

19

17

15

13

11

9

7

5

Marginal

product of labor

(bushels per

worker)

Quantity of labor (workers)

6543210 78

100

80

60

40

20

Quantity

of wheat

(bushels)

Quantity of labor (workers)

(a) Total Product (b) Marginal Product of Labor

TP

figure 69.2 The Production Function for George and Martha’s Farm

Panel (a) shows how the quantity of output of wheat on George

and Martha’s farm depends on the number of workers employed.

Panel (b) shows how the marginal product of labor depends on the

number of workers employed.

Employment and Output for George and Martha’s Farm

table69.1

0 1 2 3 4 5 6 7 8

0

19

36

51

64

75

84

91

96

Quantity of

wheat

Q

(bushels)

Quantity of

labor

L

(workers)

Marginal product of labor

MPL

(bushels per worker)

ΔQ

ΔL

19

17

15

13

11

9

7

5