Consider the following:
(i) Suppose the firm is in the short run, and consider the first stage of production. What happens to the average product of labor when the firm adds an additional worker? What causes this change in labor productivity?
(ii) Repeat part i for the second stage of production.
(i) In the first stage of production, an additional worker will raise the average product of labor. The additional worker creates more opportunities for specialization and thus makes the other workers more productive.
(ii) In the first stage of production, an additional worker will reduce the average product of labor. In this case, the additional worker creates additional crowding. The firm's fixed capital must be shared among more workers, which makes the workers less productive.
You might also like to view...
If the U.S. real exchange rate is 125, the U.S. price index is 140, and the Japanese price index is 165, what is the yen to dollar exchange rate?
A) 106.06 B) 125.65 C) 147.32 D) 184.80
When a recession ends
A) the household sector decreases spending substantially. B) firms increase the amount of borrowing. C) interest rates decrease. D) households decrease spending on durable goods.
Which of the following is true, other things equal?
a. A reduction in prices will increase the real wealth of those holding a fixed quantity of money. b. A reduction in prices will lead to a decline in net exports. c. A reduction in prices will increase the scarcity of money, raise the real interest rate, and, thereby, encourage investment and consumption. d. A reduction in prices will increase profit margins and, thereby, stimulate additional investment.
Private property right enforceability means that you can use the reward from your effect to?
A. Sale B. Consumers C. Investment D. Help the pue E. All