Give an example of a firm that is experiencing negative marginal product and explain how the firm could change this situation.
What will be an ideal response?
Students should make clear they understand that negative marginal product occurs when using additional variable input units causes total product to fall, and that the way to resolve this situation is to reduce input units. For example, a construction company could experience negative marginal product if it sent so many extra workers to a job site that they were getting in each other’s way and causing accidents. Sending some of the extra workers home would remedy the situation.
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In the above figure, if the real wage is $20 per hour, a labor
A) shortage will occur and the real wage will rise. B) shortage will occur and the real wage will fall. C) surplus will occur and the real wage will rise. D) surplus will occur and the real wage will fall.
Jim's Burgers produces 600 burgers per week. Each burger sells for $3 . Goody Candy orders 500 burgers for its upcoming office party from Jim's Burgers. Jim decided to accept the order for $1250 lump sum. What would be the marginal revenue per burger for this order?
a. $3 b. $2.50 c. $0.50 d. It cannot be determined with the information given