Question

The menu at Joe​'s coffee shop consists of a variety of coffee​ drinks, pastries, and sandwiches. The marginal product of an additional worker can be defined as the number of customers that can be served by that worker in a given time period. Joe has been employing one​ worker, but is considering hiring a second and a third. Explain why the marginal product of the second and third workers might be higher than the first.

The marginal product of the second and third workers might be increasing because

A.workers can specialize at a separate task​, and total output will increase.

B.workers can take advantage of existing machinery​, and output will increase at an increasing rate. Your answer is correct.

C.workers can specialize at a separate task​, and average output will increase.

D.workers of higher quality can be​ hired, and output will increase at an increasing rate.

E.the company can purchase more machinery for the additional​ workers, and output will increase at an increasing rate.

Why might you expect the marginal product of additional workers to diminish​ eventually?

​Eventually, as successive workers continue to be added to the production​ process,

A.they may no longer be able to specialize​, and total output will decrease.

B.the company may experience setbacks in technology.

C.the​ company's equipment may become outdated and​ inefficient, and output will increase at a diminishing rate.

D.the company may use less​ capital, and output will increase at a diminishing rate.

E.they may get in each other's way​,and output will increase at a diminishing rate.

Answer 1

Question 2

Option E.

Marginal product of labor is the addtional output product by adding one more worker.

Marginal product declines due to the law of diminishing marginal returns. In the short run, one factor is fixed, like machinery which is capital, and other factors like labor are variable. If more and more labor is added to fixed capital, then the productivity of labor falls after a certain point. They will get in each other' s way and marginal product will fall.