How is Total Real Wage Paid to Labor calculated?

The calculation of Total Real Wage Paid to Labor is fundamentally rooted in the concept of the Marginal Product of Labor (MPL). When we take the MPL and multiply it by the total number of workers, we are effectively measuring the value of the additional output generated by each unit of labor. This reflects the productivity of labor within the economy, where the MPL indicates how much extra output is produced when one additional worker is employed.

This approach aligns with the principles of labor economics, emphasizing that wages are closely tied to productivity. By multiplying the MPL by the total number of workers, we derive the total wages that correspond to the productivity levels in the economy. This method captures the overall contribution of the labor force to the output, leading to a comprehensive understanding of labor compensation in real terms.

In contrast, the other choices do not accurately represent the calculation of total wages. For instance, multiplying MPL by the total number of machines does not reflect labor costs but rather capital inputs, which is unrelated to labor's contribution directly. Similarly, calculating total output divided by the number of workers provides an average output per worker but does not reflect real wages since it does not take into account the actual performance of each worker. Lastly, simply multiplying the fixed wage rate by hours worked