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Mr. Weiss

Mr. Weiss. Section 13 – Module 71 Activity – More on Marginal Product. The following table is for a perfectly competitive firm. Calculate the additional output (marginal product) attributable to each worker.

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Mr. Weiss

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  1. Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product The following table is for a perfectly competitive firm. • Calculate the additional output (marginal product) attributable to each worker. • At what point (if any) do diminishing returns set in? How were you able to determine that?

  2. Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product Answers for Questions 1 & 2: • 1st worker – 10 • 2nd worker – 15 • 3rd worker – 20 • 4th worker – 5 • 5th worker – 3 • 6th worker – 1 • 7th worker - -3 • 2. Diminishing returns set in with the addition of the 4th worker. This is so because the marginal product of the 4th worker was 5 as compared to the marginal product of the 3rd worker being 20. The point of diminishing returns is where the marginal product of the variable input (labor) decreases.

  3. Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product 3. If this product sells for $5 ea, calculate the value of the marginal product of labor in the table below.

  4. Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product Answer for Question 3:

  5. Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product 4. If each worker receives a wage of $40.00, how many workers will a profit maximizing firm hire? Why? 5. If the product price were to increase to $10.00 each how would that affect the answer to question 4?

  6. Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product Answers for Questions 4 & 5: 4. Three, that is the last input of labor where the marginal resource cost is less than the value of the marginal product. 5. The number of workers hired would increase to 4.

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