Consider the short run production function for a hypothetical restaurant shown in the table.Cooks are equally talented and hardworking.The MPL column in the table illustrates
A) that firms tend to hire the best workers first.
B) the law of supply.
C) diminishing marginal returns in labor that derives from the fact that as employment expands cooks have less capital per person to work with.
D) increasing returns to scale followed by decreasing returns to scale, which is a fundamental empirical proposition in economics.

Question

Consider the short run production function for a hypothetical restaurant shown in the table.Cooks are equally talented and hardworking.The MPL column in the table illustrates
A) that firms tend to hire the best workers first. 
B) the law of supply. 
C) diminishing marginal returns in labor that derives from the fact that as employment expands cooks have less capital per person to work with. 
D) increasing returns to scale followed by decreasing returns to scale, which is a fundamental empirical proposition in economics.

Quizplus · Accepted Answer

The MPL column in the table illustrates diminishing marginal returns in labor, which means that as employment expands, cooks have less capital per person to work with. This is due to the fixed amount of kitchen space and equipment. Therefore, each additional cook added leads to a smaller increase in output. This is a common phenomenon in production functions and is known as the law of diminishing marginal returns. Option A is not relevant to the information provided in the table. Option B is not related to the MPL column. Option D is not applicable as the table only shows short-run production function and does not allow for analysis of scale.

Consider the Short Run Production Function for a Hypothetical Restaurant