CA Foundation · Business Economics · Theory of Production and Cost
A manufacturing firm in Delhi observes that when it increases labour from 4 workers to 5 workers, total output rises from 80 units to 95 units. What is the marginal product of the 5th worker?
The marginal product of the 5th worker is 15 units. It is calculated by finding the difference between total output with 5 workers (95 units) and total output with 4 workers (80 units).
- A15 unitsCorrect
- B19 units
- C20 units
- D80 units
Explanation
Marginal product is the additional output from one additional unit of input. Here, the 5th worker adds (95 - 80) = 15 units to total output. This is straightforward calculation: MP = Change in TP / Change in Labour. Option 1 (19 units) would result from dividing 95 by 5, which confuses average product with marginal product.
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