## Related questions with answers

Magnificent Blooms is a florist specializing in floral arrangements for weddings, graduations, and other events. The firm has a fixed cost associated with space and equipment of $100 per day. Each worker is paid$50 per day. The daily production function for Magnificent Blooms is shown in the accompanying table.

$\begin{array}{cc} \begin{array}{c} \text { Quantity of labor } \\ \text { (workers) } \end{array} & \begin{array}{c} \text { Quantity of floral } \\ \text { arrangements } \end{array} \\ \hline 0 & 0 \\ \hline 1 & 5 \\ \hline 2 & 9 \\ \hline 3 & 12 \\ \hline 4 & 14 \\ \hline 5 & 15 \\ \hline \end{array}$

Calculate the marginal product of each worker. What principle explains why the marginal product per worker declines as the number of workers employed increases?

Solution

Verified**A)** The marginal product per worker is shown in the table below.

It is calculated like this:

$\begin{aligned} MPL&=\dfrac{\Delta~ \text{Quantity of floral arrangements}}{\Delta~\text{Quantity of labor}}\\ \end{aligned}$

Quantity of labor (workers) | Quantity of floral arrangements | MPL |
---|---|---|

0 | 0 | / |

1 | 5 | 5 |

2 | 9 | 4 |

3 | 12 | 3 |

4 | 14 | 2 |

5 | 15 | 1 |

**Principle of diminishing returns** explains why the marginal product per worker declines as the number of workers employed increases.

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