Asked by Angel Jordan on May 11, 2024
Verified
You operate a car detailing business with a fixed amount of machinery (capital) , but you have recently altered the number of workers that you employ per hour. Three employees can generate an average product of 4 cars per person in each hour, and five employees can generate an average product of 3 cars per person in each hour. What is the marginal product of labor as you increase the labor from three to five employees?
A) MP = 3 cars
B) MP = 1.5 cars
C) MP = 15 cars
D) MP = -1 cars
Marginal Product
The increase in output that results from employing an additional unit of a factor of production, ceteris paribus.
Labor
Human effort, both physical and mental, used in the production of goods and services, considered an essential factor of production.
Car Detailing
The process of thoroughly cleaning, restoring, and finishing a car to achieve a show-quality level of detail, both inside and out.
- Understand the principles behind production functions and ascertain the calculations for labor's marginal and average product.
Verified Answer
BU
Brian UthayakumarMay 12, 2024
Final Answer :
B
Explanation :
Marginal product of labor (MPL) is the additional output generated by adding one more unit of labor, while holding all other inputs constant. To calculate MPL, we need to find the difference in total output generated by adding the fifth employee and the third employee, and divide it by the increase in labor (2 employees in this case).
Total output with 3 employees = 3 x 4 = 12 cars per hour
Total output with 5 employees = 5 x 3 = 15 cars per hour
MPL = (15 - 12) / (5 - 3) = 1.5 cars per person in each hour.
Therefore, the answer is B, MPL = 1.5 cars.
Total output with 3 employees = 3 x 4 = 12 cars per hour
Total output with 5 employees = 5 x 3 = 15 cars per hour
MPL = (15 - 12) / (5 - 3) = 1.5 cars per person in each hour.
Therefore, the answer is B, MPL = 1.5 cars.
Learning Objectives
- Understand the principles behind production functions and ascertain the calculations for labor's marginal and average product.