# What Happens to the Curve of the Marginal Product of Labor When Capital Is Limited?

The marginal product of labor is a variable used in economic theory. This variable quantifies the additional output produced by adding an additional unit of labor. The value of this variable is affected by several factors, including the amount of available capital. When capital is limited, the curve that represents changes in the marginal product of labor will rise to a point. From this point, the curve will decline.

## Marginal Product of Labor

The marginal product of labor functions as a measure of the increase in production yielded by adding one more unit of labor into a business operation. A simple example of how to calculate the marginal product of labor involves a landscaping company. The landscaping company plants 100 bushes per day with its current 10 employees. After the company adds one more employee, the company plants 120 bushes per day. The marginal product of labor for the most recent employee is 20 bushes per day.

## Marginal Product of Labor Curve

Each additional unit of labor will generate a different marginal product. The curve that represents the changes in the marginal product of labor will be a parabola, with an incline up to a point and a decline after that point.

## Limits on Capital

Capital goods include land, buildings and equipment. If capital goods were to increase with additional labor, the marginal product would not ever decline. But capital is fixed at any moment in time. So the marginal product of labor will suffer an inevitable decline. Instead of each additional employee increasing overall productivity, productivity declines.

## The Curve

The product of labor when adding another employee is less than when adding the previous one. The curve will flatten, as each employee's productivity is lower. At a later point, adding one more employee will deliver a negative marginal product and the curve will decline.

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Living in Houston, Gerald Hanks has been a writer since 2008. He has contributed to several special-interest national publications. Before starting his writing career, Gerald was a web programmer and database developer for 12 years.