The menu at JoseJose's coffee shop consists of a variety of coffee drinks, pastries, and sandwiches. The marginal product of an additional worker can be defined as the number of customers that can be served by that worker in a given time period. JoseJose has been employing one worker, but is considering hiring a second and a third. Explain why the marginal product of the second and third workers might be higher than the first.

Question

17-02-2020
Business

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The menu at JoseJose's coffee shop consists of a variety of coffee drinks, pastries, and sandwiches. The marginal product of an additional worker can be defined as the number of customers that can be served by that worker in a given time period. JoseJose has been employing one worker, but is considering hiring a second and a third. Explain why the marginal product of the second and third workers might be higher than the first.

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enyo enyo · Answer 1 · 2020-02-18T20:39:22+01:00

Answer:

Because Jose's coffee shop is in the 1st stage 'Increasing Returns to Factor' as per 'Law of Variable Proportions'

Explanation:

Law of Variable Proportions states : As variable factors are employed on a fixed factor

The total product 1st increases at an increasing rate, then increases at a decreasing rate, then starts falling.
So, The Marginal product 1st increases, then becomes zero , then starts becoming negative.

Jose's Coffee Shop is in 1st stage 'Increasing Returns to Factor' of TP increasing at increasing rate, MP increasing : Such because the variable factors are insufficient as per the fixed factor, their employment creates better division of labour & specialisation benefits and utilise fixed factor more optimally. This increases each additional labour's efficiency.

Eg : 1 worker would have to take the order from customers, communicate it to the kitchen, arrange the table for them, get the order to their table. Employing more labour at this stage would streamline the process much better & worker's MP will rise.