Final answer:
The marginal product is the additional output a firm can produce by adding an extra worker to the production process, and it depends on the available capital and technology. It is key in determining the value of labor to a firm in a competitive market.
Step-by-step explanation:
The marginal product in the context provided is: A) The added value a worker produces through their labor. Specifically, marginal product is defined as the additional output a firm can produce by adding one more worker to the production process. It's an essential concept in microeconomics that helps firms determine the optimal number of workers to employ.
It is crucial to note that the marginal product is not the same as the moral value of labor or whatever value the market assigns to a worker’s labor. These are different concepts. The marginal product assumes that workers in a particular labor market are homogeneous, meaning they have similar background, experience, skills, and effort levels. As such, the marginal product depends on the capital and technology available to workers.
The value of each worker's marginal product, when monetized, is the market price of the additional output produced. This can be expressed as Demand for Labor = MP1 x P, where MP1 is the marginal product of one worker and P is the price of the output. Hence, the value of the marginal product of labor plays a crucial role in a firm's hiring decisions, especially in a perfectly competitive market.