The relationship between labor usage and output at the local coffee shop is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required. $\begin{array}{cc}
\begin{array}{c}
\text { Labor } \
\underline {\text { Input }}
\end{array} & \begin{array}{c}
\text { Cups of } \
\underline {\text { espresso }}
\end{array} \
0 & \text { 0 } \
1 & 25 \
2 & 45 \
3 & 60 \
4 & 70 \
5 & 75
\end{array}$
The marginal product of the fourth worker is _______.

Question

The relationship between labor usage and output at the local coffee shop is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required. $\begin{array}{cc}
\begin{array}{c}
\text { Labor } \
 \underline {\text { Input }}
\end{array} & \begin{array}{c}
\text { Cups of } \
 \underline {\text { espresso }}
\end{array} \
 0 & \text { 0 } \
1 & 25 \
2 & 45 \
3 & 60 \
4 & 70 \
5 & 75
\end{array}$
The marginal product of the fourth worker is _______.

Quizplus · Accepted Answer

The marginal product of labor is the additional output produced by one additional unit of labor input. The marginal product of the fourth worker can be calculated by finding the change in output as a result of hiring the fourth worker, which is 10 (70-60). Therefore, the marginal product of the fourth worker is 10 cups of espresso.

To maximize profits, the coffee shop should hire workers up to the point where the marginal product of labor equals the wage rate. Since the price of a cup of espresso is $1.25 and no other inputs are required, the revenue generated by one additional unit of labor input is also $1.25. Therefore, the coffee shop should hire up to the point where the marginal product of labor is equal to $1.25, which occurs with the third worker (since the marginal product of the fourth worker is less than $1.25). Therefore, the best choice would be to hire three workers. Answer: 3.

The Relationship Between Labor Usage and Output at the Local