What is the marginal product of the third hour of labour, according to following information ? Hours of Labour 0, 1, 2, 3 Total Output 0, 100, ?, 240 Marginal Product 0, 100, 80, ?

Question

Accepted Answer

The correct option is 2:

To determine the marginal product (MP) of the third hour of labor, we must first understand the relationship between Total Output (TO) and Marginal Product. Marginal Product is defined as the change in Total Output resulting from employing one additional unit of a variable factor, which in this case is labor. The formula is: MP_n = TO_n - TO_(n-1).

First, let's find the missing Total Output for the second hour of labor (TO at n=2). We know the MP of the second hour is 80, and the TO of the first hour (TO at n=1) is 100.
MP\_2 = TO\_2 - TO\_1
80 = TO\_2 - 100
TO\_2 = 180

Now, we can find the Marginal Product of the third hour of labor (MP at n=3). We are given that the Total Output for 3 hours of labor (TO at n=3) is 240, and we just calculated TO for 2 hours is 180.
MP\_3 = TO\_3 - TO\_2
MP\_3 = 240 - 180
MP\_3 = 60.
Therefore, the marginal product of the third hour of labor is 60.

The incorrect option is 1 (240): This value represents the total output produced by 3 hours of labor, not the marginal product of the third hour. Marginal product measures the *change* in output, not the total output.

The incorrect option is 3 (80): This is the marginal product of the second hour of labor. The question specifically asks for the marginal product of the *third* hour.

The incorrect option is 4 (160): This value is calculated by incorrectly subtracting the output of the first hour from the output of the third hour (240 - 100 = 140) or possibly by adding the marginal products (100 + 60), which doesn't represent the marginal product of the third hour. The marginal product calculation must be based on the preceding unit of labor.