Question

Number of Workers	Number of Pizzas
1	20
2	40
3	65
4	80
5	90
6	95
7	90

For questions a and b refer to the above table:

1. The table refers to the number of quantity of pizzas that can be produced in a day what is the marginal product of the 4^th worker?
2. With which worker will diminishing returns set in?

Answer 1

Number of workers, L	Number of pizzas, Q	Marginal Product of labor, MPL= Change in Q/Change in L
1	20	20
2	40	20
3	65	25
4	80	15
5	90	10
6	95	5
7	90	-5

a)

Marginal Product of 4th worker=Change in output/Change in number of workers

Marginal Product of 4th worker=(80-65)/(4-3)=15

b)

Refer to above table, we observe that MP starts decreasing at the addition of 4th worker. So, we can say that

Diminishing returns sets in with 4th worker.