Question

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.

Answer #1

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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