You Operate a Car Detailing Business with a Fixed Amount

question 39

Multiple Choice

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?

• A) AP = 3 cars per worker
• B) AP = 5 cars per worker
• C) AP = 4 cars per worker
• D) We do not have enough information to answer this question.

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Definitions:

Factor of Production

An input used in the production of goods or services, such as land, labor, capital, and entrepreneurship.

Competitive Market

A market structure characterized by many buyers and sellers, where no single entity can dictate the market price of the product or service.

Final Product

The last output of a production process, after all stages of production are completed.

Marginal Revenue Product Curve

A graphical representation showing how the extra revenue generated from employing one more unit of a resource changes as more of the resource is employed.