Table 18-9
The following table shows the production function for a particular business. The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis.
-Refer to Table 18-9. What is the marginal product of the third unit of labor?
A)40 units
B)50 units
C)60 units
D)180 units

Question

Table 18-9
The following table shows the production function for a particular business. The numbers represent the various labor and output combinations the firm may choose for its output on a daily basis. 
-Refer to Table 18-9. What is the marginal product of the third unit of labor?
A)40 units 
B)50 units 
C)60 units 
D)180 units

Quizplus · Accepted Answer

The marginal product of labor is calculated as the change in total output divided by the change in labor input. In this case, the change in total output from 50 to 60 units (when moving from the second to the third unit of labor) is 10 units. Therefore, the marginal product of the third unit of labor is 10 units. The best choice for the firm would be to hire three units of labor as this is where the marginal product of labor is the highest. Beyond this point, the marginal product of labor starts to decrease, indicating diminishing returns to labor.

Table 18-9 The Following Table Shows the Production Function for a Particular