1. Assume that Ms. Desdimona, the owner, and manager of the Fine Duplicating Service located near your university and she is seeking to fill a vacant position. Should she be more concerned with the average product of labor or the marginal product of labor for the last person hired? If she observes that average product is just beginning to decline, should she hire any more workers? She estimates that the additional workers would generate the following output. What does this situation imply about the marginal product of your last worker hired? State how the law of diminishing returns is reflected in the shape of the total product curve and indicate the relationship between diminishing marginal return and the stages of the production. How would you determine the various stages of production from this table? Explain intuitively what might cause the marginal product of labor to be negative. Workers Hired 1 2 3 4 5 6 7 8 Total Product (Q) 12 22 30 36 40 40 37 32
1. Assume that Ms. Desdimona, the owner, and manager of the Fine Duplicating Service located near your university and she is seeking to fill a vacant position. Should she be more concerned with the average product of labor or the marginal product of labor for the last person hired? If she observes that average product is just beginning to decline, should she hire any more workers? She estimates that the additional workers would generate the following output. What does this situation imply about the marginal product of your last worker hired? State how the law of diminishing returns is reflected in the shape of the total product curve and indicate the relationship between diminishing marginal return and the stages of the production. How would you determine the various stages of production from this table? Explain intuitively what might cause the marginal product of labor to be negative. Workers Hired 1 2 3 4 5 6 7 8 Total Product (Q) 12 22 30 36 40 40 37 32
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 15P
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