Asked by Anusree Nambiar on Jul 29, 2024
Verified
A firm produces 60 units of output with 5 workers, 65 units with 6 workers, and 68 units with 7 workers. The firm's production function exhibits diminishing marginal productivity between 5 and 7 workers.
Diminishing Marginal Productivity
A principle in economics that indicates that as one inputs more of a factor of production while holding other factors constant, the additions to output will eventually decrease.
Output
The quantity of goods or services produced in a given period by a firm, industry, or country.
- Understand the principle of diminishing marginal productivity and its influence on cost functions.
Verified Answer
ZK
Zybrea KnightAug 02, 2024
Final Answer :
True
Explanation :
The marginal productivity of labor decreases as the number of workers increases from 5 to 7, indicating diminishing marginal productivity. From 5 to 6 workers, output increases by 5 units, but from 6 to 7 workers, it increases by only 3 units, showing a decrease in the additional output per worker.
Learning Objectives
- Understand the principle of diminishing marginal productivity and its influence on cost functions.