EBK ESSENTIALS OF ECONOMICS
EBK ESSENTIALS OF ECONOMICS
4th Edition
ISBN: 8220103647380
Author: KRUGMAN
Publisher: MAC HIGHER
Question
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Chapter 6, Problem 1P
To determine

Concept Introduction:

Fixed input: It is an input, which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of an increase or decrease in output.

Variable input: This input is directly proportional to the level of output produced, it increases with an increase in output and vice versa.

Marginal Product of Labor (MPL): It refers to the additional units of output, which is produced by employing an additional unit of labor in the current labor force.

    EBK ESSENTIALS OF ECONOMICS, Chapter 6, Problem 1P , additional homework tip  1

Here,

  • EBK ESSENTIALS OF ECONOMICS, Chapter 6, Problem 1P , additional homework tip  2is the change in quantity.
  • EBK ESSENTIALS OF ECONOMICS, Chapter 6, Problem 1P , additional homework tip  3is the change in labor.

Expert Solution & Answer
Check Mark

Explanation of Solution

a. Fixed input and variable input.

  • In this case, the fixed input are machines, refrigerator and yogurt.
  • Variable inputs are workers, toppings for sprinkling, cups, yogurt mix.

Conclusion:

There are three fixed inputs and the others are variable inputs.

b. Total Product curve:

EBK ESSENTIALS OF ECONOMICS, Chapter 6, Problem 1P , additional homework tip  4
Fig 1

  • More quantity of frozen yogurt will be produced as more workers are employed so the total product curve will slope upwards.
  • Total product curve will start from the origin, on the y-axis quantity of frozen yogurt is measured and on the x-axis quantity of labor is measured.

Conclusion:

The total product curve will slope upwards.

c. Marginal product will decline with an increase in the number of workers:

The marginal product of the first labor is:

    EBK ESSENTIALS OF ECONOMICS, Chapter 6, Problem 1P , additional homework tip  5

The marginal product of the second labor is:

    EBK ESSENTIALS OF ECONOMICS, Chapter 6, Problem 1P , additional homework tip  6

The marginal product of the third labor is:

    EBK ESSENTIALS OF ECONOMICS, Chapter 6, Problem 1P , additional homework tip  7
  • With an increase in the labor, marginal productivity will decline, so it can be said that with the working of each additional labor, it will be working with the smaller share of the fixed inputs.
  • Production of an additional labor will be less than the previous labor.

Conclusion:

Therefore, the marginal product of an additional labor will fall.

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