Barney's Beds Currently Hires 14 Workers

question 52

Essay

Barney's Beds currently hires 14 workers. The average product of labor is 2 beds per day, and the marginal product of a 15th worker is expected to be three beds per day. If the firm hires the 15th worker, what will happen to the average product of labor? Explain.

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Definitions:

Perpetual Inventory System

An inventory tracking system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Debit Memo

A document issued to record a reduction in the balance due from a customer, often due to a return or correction.

Gross Profit

The difference between revenue and the cost of goods sold before expenses.

Single-Step Income Statement

An income statement format that calculates net income using a single subtraction of total expenses from total revenue.