Question

17. Refer to Table 13-2. At which number of workers does diminishing marginal product begin? ooo

Answer 1

17. We can calculate the marginal product for each unit of production and then see from where it starts to decrease

Marginal Product at n units of factor = Total Product at n units of factor - Total Product at (n-1) unit of factor

So, let's calculate for each number of workers their marginal product :

When number of workers = 1

• Marginal Product = 50 - 0 = 50

​​​​​​​When number of workers = 2

• Marginal Product = 110 - 50 = 60

​​​​​​​When Number of workers = 3

• Marginal product = 180 - 110 = 70

​​​​​​​When Number of workers = 4

• Marginal product = 260 - 180 = 80

​​​​​​​When Number of workers = 5

• Marginal product = 330 - 260 = 70

​​​​​​​From above calculated Marginal Product of each worker we can see that :

Marginal Product increases for the workers till the 4^th unit from 50 to 60 to 70 then to 80. But at the 5^th unit of worker the Marginal product falls back to 70 units.

So, Diminishing Marginal product begins from the 5^th​​​​​​ worker.

Hence, Option d. 5 is correct

14. We know as per Law of Diminishing Marginal product as the number of factors are increased their is a fall in the marginal product from the additional unit of that factor after a certain point.

One of the cause of this Diminishing Marginal product is the 'fixity' of the other factor of production.

As in our question it says Firm's regards number of workers as variables and the size of factory as fixed, which means that the output is dependent on how much additional workers we employ as the size will be fixed. So it says that as we increase the number of workers the output will increase. But we know as per the Law of Diminishing Marginal product this increase will not be continuos as there will be certain maximum output after which any additional worker employed will result in a fall in the marginal product.

Hence, We can say this assumption of workers being variable will work in the short run as their will be an increase in marginal product but in the long run there will be a point at which maximum will be attained after which the fall begins hence, in the long run this will not be true.

So, The assumption is realistic in the short run, but not in the long run.

Hence, Option a. ​​​​​​​is correct