Question

2. A farmer is growing corn on an acre of land. Output will be 200 bushels if one worker is hired, 500 if two, 700 if three, 760 if four, and 795 if five. The marginal product of the fourth worker is _bushels of corn. a. 850 b. 150 c. 60 d. 50 3. Decreasing returns to scale a. refers to a case with at least one fixed input b. provides profit incentives for firms to expand in order to overcome their problems c. is a long run concept d. none of the above 4. Which of the following statements is true of the relationship between marginal product and average product of labor? a. When the marginal product of labor is decreasing, the average product of labor must also be decreasing b. When the average product of labor is decreasing, average product must be greater than marginal product c. When the marginal and average products of labor are equal, the marginal product is at its minimum. d. When the average product of labor is increasing, the marginal product of labor must also be increasing.

Answer 1

2 - Option C

60

Marginal product of 4th worker = 760 - 700

= 60

3 - Option C

Is a long run concept.

In short run , marginal return is applied. All the factors are variable in long run and decreasing returns to scale reduce profits. Thus other options except C are wrong.

4 - Option A

When the marginal product of labor is decreasing , average product must also be decreasing.

The other options give the wrong relationship hence will be wrong.