Staci's Sign Shoppe makes signs for businesses. Staci is currently producing 210 signs per week with three employees. Staci hires an additional worker and total output per week rises to 292 signs. At four workers, marginal product is _____ the average product; thus, average product is _____.

Question

Quizplus · Accepted Answer

With the addition of the fourth worker, output increases from 210 to 292 signs, which is an increase of 82 signs. The marginal product of the fourth worker is the additional output produced by that worker, which is 82 signs. Before the fourth worker was hired, the average product per worker was 210 signs/3 workers = 70 signs per worker. After hiring the fourth worker, the total output is 292 signs, so the average product is 292 signs/4 workers = 73 signs per worker. Since the marginal product of the fourth worker (82 signs) is above the average product before the worker was hired (70 signs), and the average product increases to 73 signs per worker, the marginal product is above the average product, and the average product is rising.

Staci's Sign Shoppe Makes Signs for Businesses