Question

# The production of customers served (Q) at a convenience store is determined by the function Q(L,K)...

The production of customers served (Q) at a convenience store is determined by the function Q(L,K) = LK + K, where L is labor and K is checkout stands. Which statement correctly describes the corresponding short-run average product of labor curve, where the number of checkout stands is fixed?

A. APL decreases at a decreasing rate.

B. APL decreases at an increasing rate.

C. APL decreases at a constant rate.

D. APL increases at a decreasing rate.

E. APL increases at an increasing rate.

Option A.

For example, Let us increase L and keep K fixed =50

 L K Output APL Change in APL 0 50 50 10 50 550 55.00 55.00 20 50 1050 52.50 -2.50 30 50 1550 51.67 -0.83 40 50 2050 51.25 -0.42 50 50 2550 51.00 -0.25 60 50 3050 50.83 -0.17 70 50 3550 50.71 -0.12 80 50 4050 50.63 -0.09 90 50 4550 50.56 -0.07 100 50 5050 50.50 -0.06

So, looking at the graph and table, the APL decreases at an decreasing rate

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