CMA Foundation · Fundamentals of Business Economics and Management · Theory of Production
A firm in Coimbatore has the production function Q = 4L, with capital fixed. If it employs 25 workers, what is the average product of labour?
The average product of labour is 4 units. With Q = 4L and 25 workers, total output is 100 units, and dividing this by 25 workers gives 4 units per worker. The figure 100 is total product, not average product.
- A4 unitsCorrect
- B25 units
- C100 units
- D2 units
Explanation
Q = 4 x 25 = 100 units. Average product = Q/L = 100/25 = 4 units. The figure 100 is total product, not average product, and it is a wrong answer here.
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