Question

Assume that capital is limited to 9 machine​ hours, but labor is unlimited in supply. In which company is the marginal product of labor​ greater? Explain. A. FLOPPY has the greater marginal product of labor. B. FLOPPY has the greater marginal product of labor when labor is greater than 1. C. DISK has the greater marginal product of labor. D. DISK has the greater marginal product of labor when labor is greater than 1.

Answer 1

Answer:

D. Disk has the greater marginal product of labor when labor is greater than 1.

Explanation:

Marginal product is the increase in output per unit of additional input. The Floppy has lesser marginal utility than Disk. When marginal product of labor is greater than than the product marginal utility increases which means more output is created.