Espresso Yourself Coffee Shop hires workers in a competitive labor market to make coffee. The ingredients...
- Espresso Yourself Coffee Shop hires workers in a competitive labor market to make coffee. The ingredients required to make each cup of coffee cost 50 cents. The coffee shop’s hourly output of coffee varies with the number of workers hired, as shown in the table below. Each cup of coffee sells for $2.00.
|
Number of workers |
Coffee (cups/hour) |
|
0 |
0 |
|
1 |
25 |
|
2 |
45 |
|
3 |
60 |
|
4 |
70 |
|
5 |
75 |
The value of marginal product of the first worker is ______ per hour.
- $37.50
- $25.00
- $2.00
- $1.50
Homework Answers
Answer. Option B is correct i.e. $25.00
The value of marginal product of the first worker is $25 per hour.
Marginal product is the addition to the total product when one more unit of worker is employed or dTP/dW. From this information, following schedule is prepared.
|
W |
Total Product(TP) |
Marginal Product |
|
Number of workers(W) |
Coffe(cups/hour) |
Marginal Product |
|
0 |
0 |
|
|
1 |
25 |
25 |
|
2 |
45 |
20 |
|
3 |
60 |
15 |
|
4 |
70 |
10 |
|
5 |
75 |
5 |
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