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:
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.
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