CA Foundation · Business Economics · Theory of Production and Cost
A workshop in Ludhiana has the following total product (TP) from labour: 1 worker = 8 units, 2 workers = 20 units, 3 workers = 33 units, 4 workers = 44 units. What is the average product (AP) of labour when 3 workers are employed?
The average product with 3 workers is 11 units. Average product is total product divided by the number of workers, so 33 divided by 3 gives 11. The figure 13 is the marginal product of the third worker, not the average.
- A11 unitsCorrect
- B13 units
- C10 units
- D12 units
Explanation
AP = TP / number of workers = 33 / 3 = 11 units. The value 13 is the marginal product of the third worker (33 - 20), which is the wrong measure. Checking: 11 x 3 = 33, which matches the data.
Did you get it right without looking?
One question tells you little. A timed set on Theory of Production and Cost shows your real accuracy, how long you take and where you lose marks.
More Theory of Production and Cost questions
- A firm's total cost rises from ₹9,000 at 100 units to ₹9,800 at 101 units, then to ₹10,500 at 102 units. Which statement is correct?
- A firm's total product with a fixed capital stock is: 1 worker = 8 units, 2 = 20, 3 = 33, 4 = 42, 5 = 48, 6 = 48. At which number of workers…
- A firm using fixed machinery has the following data: with 6 workers, average product is 15 units; with 7 workers, marginal product of the 7t…
- Which of the following best explains why marginal product eventually diminishes as more units of a variable factor are added to fixed factor…
- Which statement correctly describes the relationship between average product (AP) and marginal product (MP) of a variable input?
- Along a typical convex isoquant, as a firm substitutes labour for capital while keeping output constant, the marginal rate of technical subs…