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Calculate the Average Product of Labour (APL) for 1, 3, and 4 employees, given their respective outputs. Will the firm recruit a fifth employee if their output is the same as with four employees?

Economics

ScanSolve AI Answer

Answer

a

200\text{200}

170\text{170}

Step-by-step solution

3 steps

Part 6

Part a

200\text{200}

To calculate the Average Product of Labour (APL), we use the formula

APL=Output (Q)Employees (L)\text{APL} = \frac{\text{Output (Q)}}{\text{Employees (L)}}
  1. Calculate APL for (I) where L = 1 and Q = 200.

    APL (I)=2001=200\text{APL (I)} = \frac{200}{1} = 200
  2. Calculate APL for (II) where L = 3 and Q = 600.

    APL (II)=6003=200\text{APL (II)} = \frac{600}{3} = 200
  3. Calculate APL for (III) where L = 4 and Q = 680.

    APL (III)=6804=170\text{APL (III)} = \frac{680}{4} = 170

    The calculated APL values are:
    (I) 200\boxed{\text{200}}
    (II) 200\boxed{\text{200}}
    (III) 170\boxed{\text{170}}

Part b

No, the firm will not recruit the fifth employee after the fourth.

The firm's output with 4 employees is 680. With 5 employees, the output remains 680. This means the marginal product of labour for the fifth employee is zero (680−680=0680 - 680 = 0). A rational firm will not hire an additional employee if that employee does not contribute to increasing total output, as it would only increase costs without increasing revenue.

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