(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
In this problem, you're going to analyze the hiring decision for Patty's Pizza Parlor.
(Description)
The table consists of 2 columns: Quantity of labor (workers), Quantity of pizza.
The table consists of 6 rows.
The first row: Quantity of labor is, 0 workers, Quantity of pizza is, 0.
The second row: Quantity of labor is, 1 workers, Quantity of pizza is, 9.
The third row: Quantity of labor is, 2 workers, Quantity of pizza is, 15.
The fourth row: Quantity of labor is, 3 workers, Quantity of pizza is, 19.
The fifth row: Quantity of labor is, 4 workers, Quantity of pizza is, 22.
The sixth row: Quantity of labor is, 5 workers, Quantity of pizza is, 24.
The following text is briefly written above the table:
Patty's Pizza Parlor has the production function per hour shown in the accompanying table. The hourly wage rate for each worker is 10 dollars. Each pizza sells for 2 dollars.
The following text is briefly written below the table:
A. Calculate the marginal product of labor for each worker and the value of the marginal product of labor per worker.
(Speaker)
In the first part of the problem, you were asked to find the marginal product of labor and the value of the marginal product of labor.
We are going to extend the table to capture these values.
(Description)
The text shown below the table is now above the table.
There are 2 new columns added to the right sight of the previous table: MPL (pizzas per worker), VMPL subscript 1 (per worker) (price of pizza equals 2 dollars). Both columns are blank.
(Speaker)
We are going to first find the marginal product of labor. Recall the marginal product of labor is found by dividing the changes in pizzas produced by the change in labor. In this case, the change in labor will always be one, so we will focus on the change in pizza production.
As Patty hires her first worker, she will increase her production from zero to nine pizzas, so the marginal product of labor for the first worker is nine.
(Description)
A cell at the intersection of the second row and the column MPL is, equals 9 minus 0 equals 9.
(Speaker)
We will continue this process for the next worker. The second worker increases total production to 15 pizzas, or a marginal product of 15 minus 9 or 6 pizzas.
(Description)
A cell at the intersection of the third row and the column MPL is, equals 15 minus 9 equals 6.
(Speaker)
We will continue this for the remaining three workers.
(Description)
A cell at the intersection of the fourth row and the column MPL is, equals 19 minus 15 equals 4.
A cell at the intersection of the fifth row and the column MPL is, equals 22 minus 19 equals 3.
A cell at the intersection of the sixth row and the column MPL is, equals 24 minus 22 equals 2.
(Speaker)
The next step is to calculate the value of the marginal product of labor. To do this, we simply multiply the marginal product of labor by the price of pizza, which is 2 dollars.
The value of marginal product for the first worker is nine times 2 dollars, or 18 dollars.
(Description)
A cell at the intersection of the second row and the column VMPL subscript 1 is, equals 9 times 2 dollars equals 18 dollars.
(Speaker)
We want to do this for the remaining workers.
(Description)
A cell at the intersection of the third row and the column VMPL subscript 1 is, equals 6 times 2 dollars equals 12 dollars.
A cell at the intersection of the fourth row and the column VMPL subscript 1 is, equals 4 times 2 dollars equals 8 dollars.
A cell at the intersection of the fifth row and the column VMPL subscript 1 is, equals 3 times 2 dollars equals 6 dollars.
A cell at the intersection of the sixth row and the column VMPL subscript 1 is, equals 2 times 2 dollars equals 4 dollars.
(Speaker)
You will notice that the value of the marginal product decreases as Patty hires more workers. The second worker provides a value of 12 dollars and the last worker provides a marginal value of 2 dollars.