Marginal Physical Product

The land and capital constraints that limit output have some interesting effects on the productivity of individual workers. Consider that seventh worker at the jeans factory. If he were hired, total output would not increase. Accordingly, that seventh worker contributes nothing to total input.

The contribution of each worker to production is measured by the change in total output that results when the worker is employed. The name for this concept is marginal physical product (MPP) and is measured as

In this case, total output doesn't change when the seventh worker is hired, so his MPP equals zero.

Contrast that experience with that of the first worker hired. Notice again what happens when the first worker is employed at the jeans factory: total output jumps from zero (point A) to 15 pairs of jeans per day (point B). This increase in output reflects the marginal physical product (MPP) of that first worker – that is, the change in total output that results from employment of one more unit of (labor) input.

If we employ a second operator, jeans output more than doubles, to 34 pairs per day (point C). Whereas the marginal physical product of the first worker was only 15 pairs, a second worker increases total output by 19 pairs.

The higher MPP of the second worker raises a question about the first. Why was the first’s MPP lower? Laziness? Is the second worker faster, less distracted, or harder working?

The higher MPP of the second worker is not explained by superior talents or effort. We assume in this exercise that all "units of labor" are equal — that is, one worker is just as good as another. Their different marginal products are explained by the structure of the production process, not by their respective abilities. The first garment worker had not only to sew jeans but also to unfold bolts of denim, measure the jeans, sketch out the patterns, and cut them to approximate size. A lot of time was spent going from one task to another. Despite the worker's best efforts (and assuming perfect efficiency), this person simply could not do everything at once.

A second worker alleviates this situation. With two workers, less time is spent running from one task to another. Now there is an opportunity for each worker to specialize a bit. While one is measuring and cutting, the other can continue sewing. This improved ratio of labor to other factors of production results in the large jump in total output. The superior MPP of the second worker is not unique to this person: it would have occurred even if we had hired the workers in the reverse order. What matters is the amount of other factors of production each unit of labor must work with.

1. Formulate the main idea of the text.

2. Find in the text English equivalents of these words and phrases.

впливати на продуктивність	12. випливати, виходити	23. рулон
наймати	13. зайнятість	24. міряти, вимірювати
сумарний випуск продукції	14.подвоювати, збільшувати удвічі	25. робити ескіз
збільшуватися	15. підняти питання	26. розкроювати
відповідно	16. збентежений, збитий з пантелику	27.полегшувати, пом’якшувати
траплятися, ставатися	17. талант	28. слушна нагода, сприятлива можливість
граничний продукт	18. зусилля, спроба	29. спеціалізуватися
кількість	19.структура виробничого процесу	30. коефіцієнт
витрати	20. робітник, що виготовляє одяг	31.кращий, вищої якості
збільшитися з… до	21. шити	32. зворотний
відбивати, відображати	22.розгортати, розстеляти

3. Are these statements true or false? Correct the false ones.

1. The change in total output associated with one additional unit of output is marginal physical product.

2. The land and capital limitations always influence on the productivity of individual workers.

3. We can increase output only if we hire more workers.

4. The productivity never depends on the number of workers.

4. Answer the questions.

1. How can different marginal products be explained?

2. How is the improved ratio of labor connected with the large jump in total output?

5. Write a summary of the text.

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