A firm uses only labour (capital is fixed) to produce a single product. The total product (TP) obtained from different numbers of workers (L) is shown below:

| L (workers) | TP (units) |
|-------------|------------|
| 0 | 0 |
| 1 | 20 |
| 2 | 45 |
| 3 | 66 |
| 4 | 80 |
| 5 | 90 |
| 6 | 96 |
| 7 | 99 |
| 8 | 100 |

The price of the product is ₦10 per unit and the wage rate is ₦150 per worker.

(a) At what level of employment does the average product of labour equal the marginal product of labour?
(b) What is the total output at that employment level?
(c) What is the marginal cost of the next unit of output when the firm employs that number of workers?

Question

A firm uses only labour (capital is fixed) to produce a single product. The total product (TP) obtained from different numbers of workers (L) is shown below:

| L (workers) | TP (units) |
|-------------|------------|
| 0           | 0          |
| 1           | 20         |
| 2           | 45         |
| 3           | 66         |
| 4           | 80         |
| 5           | 90         |
| 6           | 96         |
| 7           | 99         |
| 8           | 100        |

The price of the product is ₦10 per unit and the wage rate is ₦150 per worker.

(a) At what level of employment does the average product of labour equal the marginal product of labour?
(b) What is the total output at that employment level?
(c) What is the marginal cost of the next unit of output when the firm employs that number of workers?

Accepted Answer

1 worker; output = 20 units; marginal cost = ₦6 per unit

Waec Model Questions Vol1 2017 Economics Question 38

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