Question

You operate a car detailing business with a fixed amount of machinery (capital), but you have recently altered the number of workers that you employ per hour. As you increased the number of employees hired per hour from three to five, your total output increased by 5 cars to 15 cars per hour. What is the average product of labor at the new levels of labor?

Answer 1

Answer:

The answer is 1.5 cars.

Explanation:

Marginal Product of labour = change in Quantity divided by change in labour

= ∆Q/∆L

= [(5 X 3) - (3 X 4)]/(5 - 3)

= [15 - 12]/2

= 3/2

= 1.5 cars.