A firm with 3 workers produces 8 units of output. When the firm hires 1 additional worker, output increases to 12 units of output. MPP is equal to
A) 4 units
B) 12 units
C) 1 unit

Question

Quizplus · Accepted Answer

The Marginal Physical Product (MPP) is calculated as the change in total output resulting from a one-unit change in the input (in this case, labor). Here, the output increases from 8 units to 12 units with the addition of one worker, which is a change of 4 units. Therefore, the MPP is 4 units.

A Firm with 3 Workers Produces 8 Units of Output