Question

(A). Define marginal physical product.

(B). Why does marginal physical product decline at a fast food store (e.g. McDonald's) when more employees are hired? (C) What are the fixed input constraints that limit worker productivity?

Answer 1

A) marginal physical product is the change in output resulting from employing one more unit of a particular input.

B) the law of diminishing returns says marginal physical product of labor decreases if more labor is employed keeping other things constant. Suppose McDonald's has hired 6 workers to make ice creams but only one labor can work on the ice cream machine and there are only two machines so there will be declining marginal physical product. Hiring one more worker will not increase Ice cream production.

C) fixed input constraints are such as ice cream machines, cola dispensers. Limited number of grills, microwaves will limit worker productivity.