4.8 Michelles business produces ceramic cups using labor, clay, and a kiln. She produces cups using a
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4.8 Michelle’s business produces ceramic cups using labor, clay, and a kiln. She produces cups using a fixed proportion of labor and clay, but regardless of how many cups she produces, she uses only one kiln. She can manufacture 25 cups a day with one worker and 35 with two workers. Does her production process illustrate decreasing returns to scale or a diminishing marginal product of labor? What is the likely explanation for why output doesn’t increase proportionately with the number of workers?
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Managerial Economics And Strategy
ISBN: 9780135640944
2nd Global Edition
Authors: Jeffrey M. Perloff, James A. Brander
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