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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
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3 stepsPart 6
Part a
To calculate the Average Product of Labour (APL), we use the formula
Calculate APL for (I) where L = 1 and Q = 200.
Calculate APL for (II) where L = 3 and Q = 600.
Calculate APL for (III) where L = 4 and Q = 680.
The calculated APL values are:
(I)
(II)
(III)
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 (). 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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