A. Why the total per/hour always increase time to time B. Why the Marginal or la

Question

A. Why the total per/hour always increase time to time
B. Why the Marginal or labor decreasing time to time
C. Why the value added unchanged
D. Why the marginal revenue product decreasing time to time

Marginal Revenue Product Marginal Revenue Product Per Hour of Labor in Sandwich Production (One Grill) MARGINAL PRODUCTOF MARGINAL REVENUE PRODUCT (MPXP) (PER HOUR) TOTAL LABOR (MP PRODUCT (SANDWICHES PRICE (P) (VALUE TOTAL LABOR (SANDWICHES PER PER HOUR) HOUR) UNITS (EMPLOYEES) ADDED PER SANDWICH)- 0 10 25 35 40 42 42 $ .50 50 50 50 50 50 5.00 7.50 5.00 2.50 1.00 10 2 15 2 © 2004 Drentice Hell Business PITblishino Princioles of Economics, 7/e Karl Case, Ray Fair 7 of 33

Explanation / Answer

A)- Total product per hour increases because marginal product of labor is positive.

B)- Marginal product of labor is decreases because of diminishing returns to factor.

C)- Value added or Price is fixed because firm are price taker.

D)- Marginal revenue of product decreases over time because it is defined as( = P*MP(L). P is fixed and MP(L) is decreasing so ovearall marginal revenue of product decreases.

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