Question

If the firm were to employ an 8th unit of labour, its total product would rise to 380 units of output. What would be the resulting values of the average product of labour and of the marginal product of labour?

Short answer

The average product of labour is$47.5$and the marginal product of labour is$20$

Step-by-step solution

Introduction

The firm was to employ an $8th$unit of labour.

The total product would increase to $380$inputs.

Explanation

Using the formula for the average product, where Q is the quantity produced and L is the labour used

$A{P}_L=\frac{Q}{L}$

$=\frac{380}{7}$

$=47.5$

Marginal product of labour

For marginal products, we use,

$∆Q$is a change in quantity and $∆L$is change in labour

$M{P}_L=\frac{\mathrm{\Delta }Q}{\mathrm{\Delta }L}$

$=\frac{20}{1}$

$=20$