Chapter 6, Problem 1P

To determine

Concept Introduction:

Fixed input: It is an input, which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of an increase or decrease in output.

Variable input: This input is directly proportional to the level of output produced, it increases with an increase in output and vice versa.

Marginal Product of Labor (MPL): It refers to the additional units of output, which is produced by employing an additional unit of labor in the current labor force.

Here,

• is the change in quantity.
  
• is the change in labor.
  

Explanation of Solution

a. Fixed input and variable input.

• In this case, the fixed input are machines, refrigerator and yogurt.

• Variable inputs are workers, toppings for sprinkling, cups, yogurt mix.

Conclusion:

There are three fixed inputs and the others are variable inputs.

b. Total Product curve:

Fig 1

• More quantity of frozen yogurt will be produced as more workers are employed so the total product curve will slope upwards.

• Total product curve will start from the origin, on the y-axis quantity of frozen yogurt is measured and on the x-axis quantity of labor is measured.

Conclusion:

The total product curve will slope upwards.

c. Marginal product will decline with an increase in the number of workers:

The marginal product of the first labor is:

The marginal product of the second labor is:

The marginal product of the third labor is:

• With an increase in the labor, marginal productivity will decline, so it can be said that with the working of each additional labor, it will be working with the smaller share of the fixed inputs.

• Production of an additional labor will be less than the previous labor.

Conclusion:

Therefore, the marginal product of an additional labor will fall.