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 Table 18-2.The marginal product of labor begins to diminish with the addition of which 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 Table 18-2.The marginal product of labor begins to diminish with the addition of which worker?

Quizplus · Accepted Answer

The marginal product of labor begins to diminish with the addition of the 3rd worker. At this point, the additional output from hiring one more worker is less than the output produced by the previous worker. This can be seen by comparing the increase in output between the 2nd and 3rd workers (20 - 17 = 3) to the increase in output between the 3rd and 4th workers (18 - 20 = -2). Therefore, it would not be cost-effective to hire an additional worker beyond the 3rd worker as the cost of their wages would not be offset by the additional revenue generated.

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