Table 18-8
Harold and Maude own a dance studio where they and their employees teach ballroom dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude's production function is detailed in the table below.
-Refer to Table 18-8. What is the marginal product of the third worker?

Question

Table 18-8
Harold and Maude own a dance studio where they and their employees teach ballroom dancing. Their company is a competitive, profit-maximizing firm. Harold and Maude's production function is detailed in the table below. 
-Refer to Table 18-8. What is the marginal product of the third worker?

Quizplus · Accepted Answer

The marginal product of the third worker is calculated by subtracting the total output with two workers (500) from the total output with three workers (550), which gives us a marginal product of 50 students. Adding a fourth worker would result in a marginal product of only 30 students, which means that the marginal cost of the fourth worker would exceed the marginal revenue from the additional output. Therefore, the best choice is to hire only three workers to maximize profits.

Table 18-8 Harold and Maude Own a Dance Studio Where They and They