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Onthefollowing graph, L representsthequantityoflaborand Q representsthequantityofoutputperweek. a. What economic principle does thefigureillustrate?

Onthefollowing graph,LrepresentsthequantityoflaborandQrepresentsthequantityofoutputperweek.



a.    What economic principle does thefigureillustrate?




b.    Supposethefirmhireseachunitoflaborfor$600perweek,andeachunitofoutputsellsfor$9.Whatisthevalueofthemarginalproductofthethirdworker?






c.    Supposethefirmsellsitsoutputfor$12perunit,anditpayseachofitsworkers$700perweek.Thevalueofthemarginalproductofthefifthworkeris






Supposethefirmhireseachunitoflaborfor$700perweek,andeachunitof

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