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Evaluating Competing Analyses of Labor Productivity
A bakery manager is considering increasing labor hours and has received two different analyses based on the company's production function, Q(h) = 100h - 2h², where Q is the number of loaves produced and h is the hours of labor. The manager currently uses 20 hours of labor per day.
Analyst A calculates the marginal product using the derivative of the production function at h=20. They report that the marginal product is 20 loaves per hour and advise that any small increase in labor time will yield output at this rate.
Analyst B calculates the marginal product by finding the actual increase in output from working the 21st hour. They report that the marginal product of adding this next full hour is 18 loaves.
The manager's goal is to decide whether to hire a new part-time employee for exactly one hour per day. Which analyst's figure (20 or 18) is the more relevant and accurate piece of information for making this specific decision? Justify your choice by explaining the difference in what each analyst's calculation truly represents.
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Social Science
Empirical Science
Science
Economy
CORE Econ
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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