Question

# Exhibit 6-1 Production of pizza data Workers Pizzas 0   0 1   4 2 10 3 15...

Exhibit 6-1 Production of pizza data

 Workers Pizzas 0 0 1 4 2 10 3 15 4 18 5 19

Exhibit 6-1 shows the change in the short-run production of pizzas as more workers are hired. The table shows the marginal product of the labor input is decreasing with the hiring of the third worker. A possible reason for this diminishing marginal product is:

 a. increased division of labor as additional workers are hired. b. increases in plant size. c. decreases in labor productivity. d. decreases in fixed cost.

Option c

decreases in labor productivity

The labor productivity decreases as the firm increases labor input because of the fixed input share of production decreases the efficiency proportion with labor inputs.

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