The following table provides the different output levels that workers could prod

Question

The following table provides the different output levels that workers could produce. For example, if three workers are making handbags and two workers are making phones, 45 handbags and 30 phones will be made. A company has 6 workers. If 3 workers are making handbags and 3 workers are making phones, what is the marginal product of phones if one worker is taken from handbag production and placed into phone production? HandbagsPhones 1 worker 20 2 workers 35 3 workers 45 4 workers50 5 workers 55 15 30 42 50 O A10 O C12

Explanation / Answer

Ans) the correct option is D. 8.

Since one worker is taken from handbag production and placed in phones production so now 4 workers are there for phone production.

Marginal product = change in total product / change in quantity of labor

= (50 - 42)/ 4 - 3 = 8

Ans) the correct option is A. 1.25 handbags

Opportunity cost = (45 - 35)/ (50 - 42) = 1.25 handbags

Ans) the correct option isC. 6

Marginal product = (16 - 10) / 2 - 1 = 6

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