In: Economics
Let's assume that a business is operating in the short run. When it uses 1 building, 5 machines, and 2 workers, it produces 25 products. When it uses 1 building, 5 machines, and 4 workers, it produces 50 products. When it uses 1 building, 5 machines, and 6 workers, it produces 100 products. When it uses 1 building, 5 machines, and 8 workers, it produces 165 products. When it uses 1 building, 5 machines, and 10 workers, it produces 240 products. When it uses 1 building, 5 machines, and 12 workers, it produces 275 products. When it uses 1 building, 5 machines, and 14 workers, it produces 292 products. With the hiring of which workers does the law of diminishing marginal returns begin?
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Ans: 12
Explanation:
Marginal Product of Worker = Change in Total Product / Change in number of workers
Diminishing marginal returns states that the total product increases at a decreasing rate.
With the hiring 12 workers the law of diminishing marginal returns begins.
Number of building |
Number of Machine |
Number of Workers |
Total Products |
Marginal Product of Worker |
1 | 5 | 2 | 25 | -- |
1 | 5 | 4 | 50 | 12.5 |
1 | 5 | 6 | 100 | 25 |
1 | 5 | 8 | 165 | 32.5 |
1 | 5 | 10 | 240 | 37.5 |
1 | 5 | 12 | 275 | 17.5 |
1 | 5 | 14 | 292 | 8.5 |