Answered: Espresso Yourself Coffee Shop hires…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 7PA

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Question

1. Espresso Yourself Coffee Shop hires workers in a competitive labor market to make coffee. The ingredients required to make each cup of coffee cost 50 cents. The coffee shop's hourly output of coffee varies with the number of workers hired, as shown in the table. Each cup of coffee sells for $2.00.

Number of workers	Coffee (cups/hour)
0	0
1	25
2	45
3	60
4	70
5	75

The marginal product of the third worker is ________ than the marginal product of the second worker, implying that ________.

greater; diminishing returns are absent
less; diminishing returns are present
neither greater nor less; the third worker will be hired
less; the third worker will never be hired

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