Test D – Question 12

### A firm with a fixed factor of production and a variable factor of production – **What is marginal product?**
– The “marginal product” of workers is the amount of products added as a result of hiring the last worker, from a continuous set of workers that begins with the first worker and ends with any chosen number of workers.
– If, for example, we chose a group of seven workers, the marginal product is the output produced by the seventh worker. – **What is “diminishing marginal product”?**
– The term “diminishing marginal product” indicates that when the number of workers is increased (and the remaining factors of production remain unchanged), then marginal product decreases.
– That is, the marginal product of the sixth worker is less than the marginal product of the fifth worker, and so on. – **Note:**
– The term “marginal product” does not only refer to workers but also to machines, units of time, etc.
– Here too, there is a phenomenon of “diminishing marginal product.” – **What will happen to total output when the firm increases the number of employees?**
– When the number of workers increases, overall output will also increase, but the increase in overall output will decrease with the increase in the number of workers. – **For example:**
– 10 workers produce 100 units of bread.
– 11 workers produce 109 units of bread (the marginal product of the 11th worker is 9).
– 12 workers produce 114 units of bread (the marginal product of the 12th worker is 5).
– 13 workers produce 117 units of bread (the marginal product of the 13th worker is 3). – **It is possible that the marginal product of the last worker will decrease until it is negative**
– That is, a situation in which total output will decrease when the firm increases the number of employees beyond a certain amount.