(Table) Based on the Table, the Marginal Physical Product of the Third

question 363

Multiple Choice

(Table) Based on the table, the marginal physical product of the third worker is
$\begin{array}{|c|c|c|c|c|}\hline L & T P & \boldsymbol{M P P L} & \boldsymbol{P} & \boldsymbol{M R P L} \\\hline 0 & 0 & 0 & \$ 10 & \$ 0 \\\hline 1 & 6 & 6 & \$ 10 & \$ 60 \\\hline 2 & 13 & 7 & \$ 10 & \$ 70 \\\hline 3 & 22 & & \$ 10 & \$ 90 \\\hline 4 & 35 & 13 & \$ 10 & \\\hline 5 & 47 & & \$ 10 & \$ 120 \\\hline 6 & 57 & 10 & \$ 10 & \$ 100 \\\hline 7 & 65 & 8 & \$ 10 & \$ 80 \\\hline 8 & & 6 & \$ 10 & \$ 60 \\\hline 9 & 76 & 5 & \$ 10 & \$ 50 \\\hline 10 & 80 & 4 & \$ 10 & \$ 40 \\\hline\end{array}$

• A) 11.
• B) 10.
• C) 9.
• D) 8.

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Definitions:

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Operating Leverage

A measure of how revenue growth translates into growth in operating income and the degree to which a company can increase operating income by increasing revenue.

Break-Even Point

The point at which total costs match total earnings from production or sales, leading to neither a profit nor a loss.

Maintenance Costs

The expenses incurred to keep an asset in working condition or restore it to proper operation.