Overview
Understanding marginal product and labor costs is essential for businesses aiming to optimize their workforce and manage expenses effectively. Marginal product helps determine how much additional output can be gained from hiring more workers, while labor costs encompass all expenses related to emplo...
Key Terms
Example: If hiring one more worker increases output from 10 to 15 units, the marginal product is 5 units.
Example: Labor costs include wages, benefits, and taxes paid for employees.
Example: Adding more workers to a fixed-size factory may lead to overcrowding and reduced efficiency.
Example: Rent for a factory is a fixed cost.
Example: Raw materials costs increase as more products are made.
Example: Salaries of factory workers are direct labor costs.