Application of diminishing marginal return.
Assume you are running a photo copy center that makes illegal copies of the textbook. An illegal copy of the book sells for $10 and you only have one copy machine. The relationship between workers and output is as follows:
|
Number of Workers
|
Number of Book Copies Made
|
Marginal Product of Labor
|
Marginal Revenue Product (MRP)
|
ME(L)
|
|
0
|
0
|
-
|
-
|
-
|
|
1
|
8
|
8
|
80
|
50
|
|
2
|
20
|
12
|
120
|
50
|
|
3
|
28
|
8
|
80
|
50
|
|
4
|
34
|
6
|
60
|
50
|
|
5
|
38
|
4
|
40
|
50
|
|
6
|
40
|
2
|
20
|
50
|
- Do copy machine operators exhibit diminishing marginal return? If so name a factor that might be generating the diminishing marginal returns.
- If copy machine operators earn $50 an hour (it's a boring job so they need to be compensated for it) how many workers should you hire?