More people working= more output
Output goes up, but not by the same rate
Marginal Output: change in output
Marginal Product of Labor times the price of output = value marginal product of Labor
To get the value marginal product of labor, we need to know “the price per shirt”.
Ceteris Paribus: Holding Capital Constant
Value Marginal Product of Labor, essentially the demand for labor
Relationship between willingness to pay and the wage.
Increasing K shifts the line, up, having more capital, makes every worker more productive.
Q= square root of labor times square root of capital
You only hire people if the company is making a profit out of the person working. The wage is