Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 5 Firm Behavior and the Organization of Industry
Chapter 13 of 36 The Costs of Production
Section 9 of 20
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On Table 1, notice as the column 1 number of workers increases, the column 3 marginal (added) product decreases
· the second worker has a marginal product of 40 cookies
· the third worker has a marginal product of 30 cookies
· the sixth worker has a marginal product of 5 cookies
This property is called diminishing marginal product.
With only a few workers, they have easy and complete access to Caroline's kitchen equipment.
As the number of workers increases, they have less access to the equipment because others are using.
Eventually as more workers are added there is no increased production as they are added.
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The diminishing marginal product is shown in Figure 2, panel (a) production function.
The change of the production function's slope shows change in Caroline's output of cookies for each additional worker.
As the number of workers increases the marginal product decreases and the production function slope becomes flatter.
It is said if there was no such thing as diminishing marginal product all the food needed for the world could be grown in one small garden, just keep adding seeds.
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small garden
chīsai niwa
小さい庭
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