FIGURE 7-1
-Refer to Figure 7-1.Suppose each unit of labour represents one worker for one month.What is the maximum number of workers the firm could hire so that the final worker hired still raises the average product of the other workers?
A)7
B)8
C)9
D)11
E)15

Question

FIGURE 7-1
-Refer to Figure 7-1.Suppose each unit of labour represents one worker for one month.What is the maximum number of workers the firm could hire so that the final worker hired still raises the average product of the other workers?
A)7 
B)8 
C)9 
D)11 
E)15

Quizplus · Accepted Answer

The maximum number of workers that the firm could hire so that the final worker hired still raises the average product of the other workers will be the point where the marginal product of labour (MPL) curve intersects the average product of labour (APL) curve for the second time from below. This occurs when the firm hires 9 workers. At this point, MPL is equal to APL and any additional worker hired will decrease APL. Therefore, the best choice is (C) 9.

FIGURE 7-1 -Refer to Figure 7-1.Suppose Each Unit of Labour Represents One