What does the marginal product of labor measure in an economic context?

The marginal product of labor measures how much additional output is produced when one more worker is added to the production process, while keeping all other inputs the same. It helps businesses understand the value of hiring more workers and how productive they will be. For example, if a bakery employs one more baker and produces 20 more loaves of bread in a day, the marginal product of that baker is 20 loaves. This concept is important because it guides companies in making decisions about hiring and resource allocation. By knowing the marginal product, firms can determine if the benefits of adding more workers outweigh the costs.