Question

3. Peterson's Bakery makes bread using two inputs: workers and machinery (ovens). In the short-run, the relationship between the number of workers and the bakery's output (loaves of bread) in a given day is as follows: Number of Workers Total Physical Product of Labor Marginal Physical Product of Labor 0 A5 65 80 85 6 82 a. (1.5 pt) Complete the Marginal Physical Product of Labor column in the table above and indicate each of the following regions (IMR, DMR, and NMR). b. (0.5 pt) Would the bakery ever want to operate in the region illustrating Negative Marginal Returns? Why or why not?

Answer 1

a) Number of workers Total Physical Product of labor Marginal Physical Product of labor IMR 30 J DMR - 33 NMR 3.) Bakery won't ever operate in the region illustrating NMR (negative marginal shun) Since it is the point where a unit increase in the labor causes total product to fall. Thus, it will not operate in this region.