Question

When Brenda’s Pastry employs three workers, total output is 6 dozen pastries per hour.  After Brenda hires a fourth worker, the number of pastries produced increases to 7 dozen per hour.  Which of the following is true about the marginal product (MP) and average product (AP) of labor for Brenda’s Pastry?

Group of answer choices

Because the MP of the fourth worker is greater than the AP of three workers, AP must fall when the fourth worker is hired

Because the MP of the fourth worker is less than the AP of three workers, AP must rise when the fourth worker is hired

Because the MP of the fourth worker is greater than the AP of three workers, AP must rise when the fourth worker is hired

Because the MP of the fourth worker is less than the AP of three workers, AP must fall when the fourth worker is hired

Answer 1

Answer: Because the MP of the fourth worker is less than the AP of three workers, AP must fall when the fourth worker is hired

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MP is the change in the total product when no. of workers is increased by 1 unit

AP = Total product/ No. of workers

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When 3 workers are employed,

TP = 6;

AP = 6/3 = 2

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When 4 workers ar employed,

TP = 7

AP = 7/4 = 1.75

MP = 1

So, MP of 4th worker < AP of 3 workers

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When MP>AP, AP is rising

When MP<AP, AP is falling

MP = AP, when AP is maximum