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1) Calculate the marginal product of each worker. What principle explains why the marginal product per worker declines as the number of workers employed increases?2). Calculate the marginal cost of each level of output. What principle explains why the marginal cost per floral arrangement increases as the number of arrangements increases?
Answer to Question:
1) MPL, shown in the following table for the five workers, is the change in output resulting from the employment of one additional worker per day. MPL falls as the quantity of labor increases due to the principle of diminishing returns.
2) The marginal cost, MC, of floral arrangements is the change in total cost divided by the change inoutput. So, to compute MC, we first need to compute total cost, TC = FC + VC, as shown in the table.MC per floral arrangement is also shown in the table. MC increases as output increases due again tothe principle of diminishing returns.
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