Table 18-2
Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day.

-Refer to 18-2.What is the value of the marginal product of the fifth worker?

Question

Table 18-2
Consider the following daily production data for Davis Golf Balls, Inc. Davis Golf Balls, Inc. sells golf balls for 50 cents each and pays the workers a wage of $30 a day.
 
-Refer to 18-2.What is the value of the marginal product of the fifth worker?

Quizplus · Accepted Answer

To calculate the marginal product, we need to find the difference in output (in this case, golf balls produced) between the fourth and fifth worker.

The fourth worker produced 80 golf balls, and the fifth worker produced 90 golf balls.

Marginal product of the fifth worker = 90 - 80 = 10 golf balls

To find the value of the marginal product, we multiply the marginal product by the selling price of each golf ball:

Value of marginal product = 10 x $0.50 = $5

Since each worker is paid a fixed wage of $30, we subtract this wage from the value of the marginal product to determine whether the additional worker is profitable:

$5 - $30 = -$25

Since the value of the marginal product is less than the wage paid, hiring the fifth worker would result in a loss for Davis Golf Balls, Inc. Therefore, the best choice would be not to hire the fifth worker.

Table 18-2 Consider the Following Daily Production Data for Davis Golf Balls