http://tinypic.com/r/2ur7adl/5 Which of the following statements concerning the
ID: 1180166 • Letter: H
Question
http://tinypic.com/r/2ur7adl/5
Which of the following statements concerning the marginal-physical-product curve above is true?
A)
Total physical product reaches a maximum between 7 and 8 workers.
B)
The total physical product of the first unit of labor is 100.
C)
The marginal physical product of the first unit of labor is 100.
D)
The average physical product of the first unit of labor is 100.
E)
All of the above.
It can be determined from the marginal-physical-product curve shown above that
A)
marginal physical product reaches a minimum with the first worker.
B)
total physical product reaches a maximum with the eighth worker.
C)
marginal physical product reaches a maximum with the eighth worker.
D)
total physical product reaches a maximum between seven and eight workers.
E)
total physical product reaches a maximum with the second worker.
In the marginal-physical-product curve shown above, the firm experiences diminishing marginal product after the quantity of labor reaches
A)
8.
B)
7.
C)
2.
D)
1.
E)
4.
Which of the following statements concerning the marginal-physical-product curve above is true?
A)
Total physical product reaches a maximum between 7 and 8 workers.
B)
The total physical product of the first unit of labor is 100.
C)
The marginal physical product of the first unit of labor is 100.
D)
The average physical product of the first unit of labor is 100.
E)
All of the above.
Explanation / Answer
1) We see from the graph that all of the statements are true. First, total physical product hit a maximum between 7 and 8 workers because the marginal physical product curve crosses the x axis between 7 and 8. Intuitively, think of this as the number of products increasing with each additional unit of labor, and then at some point, total production will fall when you hire more workers. That means that there is a point when adding an additional labor will get you 0 additional product; and at that point, if you hire more laborers, your total product will start decreasing. Therefore, that is the point at which total physical product is maximized. B) is also true because we see that the marginal product at the first unit of labor is 100. Since it's the first unit of labor, the marginal (additional) product is simply the total amount of product made. C) is also true because of what I said in B, that the marginal product=total product at the first unit (this is true because at the 0th unit of labor, there is 0 total units being made... so the jump from 0 to 100 is both the marginal product and the total product). D) is true because at the first unit of labor hired, the total product is 100, and average physical product = total product/number of laborers = 100/1=100. So, D is also true. The answer is E.
2) A) is false because we see that the marginal physical product actually is falling after the second laborer, and from the 4th laborer on, the marginal product is already lower than the marginal product of the first unit of labor. B) is false because we see that the total physical product, as explained in the last question, reaches a maximum between the seventh and eighth worker. By the time we get to the 8th worker, the marginal product is falling, so we will not have the maximal total physical product. C) is false because marginal physical product is negative at the 8th unit (look at the curve). The maximum for marginal physical product is actually at the second laborer hired. D) is true, since we do see that the total physical product reaches a maximum between seven and eight workers (as explained in the solution for the first question). Finally, E) is false because while marginal physical product is at a maximum at the second worker, total physical product is at a maximum when the marginal physical product curve crosses the x-axis.
3) Diminishing marginal product happens when the marginal product curve (the curve shown in the graph) starts decreasing. This means that hiring an additional worker will give you less physical product than the last person. This starts happening after the 2nd unit of labor is hired. We see that after laborer #2, the marginal product curve starts to fall. The answer is C.
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