2. Suppose you operate a copying service that has two copy machines. After some experience, you...

2. Suppose you operate a copying service that has two copy machines. After some experience, you find that hiring additional workers increases your copying capacity by 500 sheets per worker each day, up to the eighth worker. But, after you have eight workers on staff, hiring additional workers produces no additional pages copied.

a. Graph the APL and the MPL. [Hint: what would the MPL of the ninth worker be? What would the APL be if nine workers were hired?]

b. Briefly explain what might cause the MPL to behave in this way.

c. Can you find the MRTS for the copying service? If so, what is it? If not, why not?

Expert Solution

Ques A. APL & MPL

Ques b. the MPL behaves this way as the 2 machines can absorb the additional labour completely. As they work on machines, the output increase is also based on the machine capacity. Hence MPL is constant for some time. Once machine reaches its maximum capacity of output which it can generate, Even an additional labour will not be able to generate additional output and thus MPL is 0.

Ques C. We cannot find MRTS in this question as the formula for MRTS is Change in Labour/Change in Capital. Although we have the change in labour, we do not have the change in capital in this case.

Rahul Sunny answered 2 years ago

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