Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product Quantity of Labor Total Output O The following table is for a perfectly competitive firm. 1.Calculate the additional output (marginal product) attributable to each worker. 2.At what point (if any) do diminishing returns set in? How were you able to determine that?

Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product Answers for Questions 1 & 2: 1.1 st worker – 10 2 nd worker – 15 2 nd worker – 15 3 rd worker – 20 3 rd worker – 20 4 th worker – 5 4 th worker – 5 5 th worker – 3 5 th worker – 3 6 th worker – 1 6 th worker – 1 7 th worker th worker Diminishing returns set in with the addition of the 4 th worker. This is so because the marginal product of the 4 th worker was 5 as compared to the marginal product of the 3 rd worker being 20. The point of diminishing returns is where the marginal product of the variable input (labor) decreases. Quantity of Labor Total Output O

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. Quantity of Labor Value of the Marginal Product Quantity of Labor Total Output O

Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product Answer for Question 3 : Quantity of Labor Value of the Marginal Product 0 1 $50 2 $75 3 $100 4 $25 5 $15 6 $ 5 $ 5 7 $-15

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?

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.