Table 18-1 Number of Workers Output Marginal Product of Labour Value of Marginal
ID: 2439925 • Letter: T
Question
Table 18-1
Number of
Workers
Output
Marginal Product
of Labour
Value of Marginal
Product of Labour
Wage
Marginal
Profit
0
0
1
100
$1000
$500
$500
2
80
$800
$500
3
60
$500
$100
4
280
$400
$500
5
20
$500
____ 22. Refer to Table 18-1. What is the marginal product of the fourth worker?
a.
30
b.
40
c.
60
d.
100
____ 23. If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following applies?
a.
diminishing profitability
b.
diminishing marginal cost
c.
diminishing marginal product
d.
diminishing average product
____ 24. What most easily explains the shape of the value-of-marginal-product curve?
a.
tight labour markets
b.
a surplus of workers
c.
diminishing marginal product
d.
downward-sloping labour demand
____ 25. Which of the following is most likely if a profit-maximizing firm starts with 25 employees and then decreases employment?
a.
The firm is losing market share.
b.
The firm is not likely to be minimizing losses.
c.
The wage exceeds the value of the marginal product of labour.
d.
The value of the marginal product of labour exceeds the wage.
Number of
Workers
Output
Marginal Product
of Labour
Value of Marginal
Product of Labour
Wage
Marginal
Profit
0
0
1
100
$1000
$500
$500
2
80
$800
$500
3
60
$500
$100
4
280
$400
$500
5
20
$500
Explanation / Answer
22. Change in output per unit change in labour
Output as the number of workers increases
0 - 0
1 - 100
2 - 180
3 - 240
4 - 280
5 - 300
The marginal product of labour for the fourth worker is 40
b) 40
Output change for the increase in the number of workers from 3 to 4 is 40
23 c) Diminishing Marginal product
Marginal utility declines as available supply decreases
This is the increase in output keeping other factors constant; with further increments, marginal returns to labour diminish as other factors remain constant
24 c) diminishing marginal product
downward sloping curve explained by the diminishing marginal product
25 c) wage exceeds the value of the marginal product of labour
Increase in output per unit increase in labour decreases; for all other factors being kept constant
This is known as the law of diminishing marginal returns
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