Question

QUESTION 33 Which of the following is true of MC when MP is increasing it is constant a. it is increasing a. it is decreasing a. It is first increasing then decreasing 2.5 points Save Answer QUESTION 34 "Suppose you run a pizza shop and currently have two employees. If you hire a third employee, your output of pizzas per day rises from 55 to 65. If you hire a fourth employee, output rises to 80 per day. A fifth and sixth employee would cause output to rise to 90 and 95 per day. Pick the correct statement Diminishing marginal product first occurs with the hiring of the fourth worker. Diminishing marginal product first occurs with the hiring of the fifth worker. Diminishing marginal product first occurs with the hiring of the sixth worker. Diminishing marginal product first occurs with the hiring of the third worker 2.5 points Save Answer QUESTION 35 Zoes Bakery determines that P< ATC and P > AVC. Zoe should continue to operate even though she is enduring an economic loss continue to operate as she is making an economic profit shut down immediately as she is enduring an economic loss raise the price until she has maximized her profits. 2.5 points Save Answer

Answer 1

33.Ans: It is decreasing

Explanation:

There is an inverse relationship between MP and MC . It means when MP increases then MC will decrease and vice versa.

34.Ans: Diminishing marginal product first occurs with the hiring of fifth worker.

Explanation:

Diminishing marginal product refers the total product increases at a decreasing rate.

MP = Change in total product / Change in number of labor

Employee	Output (Pizza)	MP
2	55	--
3	65	10
4	80	15
5	90	10
6	95	5

35.Ans: continue to operate even though she is enduring an economic loss.

Explanation:

When P <  ATC , then there will be loss.

When P > AVC , then she will continue production because the variable cost is covered.