Question

Say the average product of 6 workers is 15. If the marginal product of the 7th worker is 18, then

a) marginal product is falling.

b) marginal product is constant.

c) average product is rising.

d) average product is falling.

Answer 1

The average product is rising because the marginal product of the 7th worker is greater than the average product of the first 6 workers.

Step-by-step explanation:

If the average product of 6 workers is 15 and the marginal product of the 7th worker is 18, this implies that the marginal product is increasing. Since the marginal product of the 7th worker is higher than the average product of the first 6 workers, when the 7th worker is hired, the average product will increase.

Thus, the correct answer to this question is c) average product is rising. The concept of marginal product is important in understanding production efficiency and the Law of Diminishing Marginal Product. This law often manifests due to fixed capital, where adding more workers eventually leads to a decline in the marginal product of each additional worker.