When a rug factory increases the labor it hires from 10 to 12 workers, the number of rugs produced increases from 16 to 20. We know then that the marginal physical product oflabor is

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Quizplus · Accepted Answer

The marginal physical product of labor is calculated as the change in output divided by the change in labor. Here, the output increases by 4 rugs (from 16 to 20) when labor increases by 2 workers (from 10 to 12), so the marginal physical product is 4/2 = 2 rugs.

When a Rug Factory Increases the Labor It Hires from 10