6. Computing labor productivity and its relationship to the demand for labor

Gopher Excavators produces shovels in a small factory and sells the shovels in a competitive market. The following table shows the company's total physical product:

LaborOutput(Number of workers)(Shovels)001902175324543005325

Use the blue points (circle symbol) to plot the total physical product (TPP

TPP) curve for Gopher Excavators on the following graph.

TPP

0

1

2

3

4

5

400

360

320

280

240

200

160

120

80

40

0

OUTPUT (Shovels)

LABOR (Number of workers)

Calculate the marginal physical product of labor (MPP

L

MPPL) of each worker, and then plot theMPP

L

MPPLcurve on the following graph using the blue points (circle symbol).

MPP

L

0

1

2

3

4

5

100

90

80

70

60

50

40

30

20

10

0

MPPL (Shovels per worker)

LABOR (Number of workers)

The following graph shows the demand for labor for three different prices per shovel:

0

1

2

3

4

5

200

180

160

140

120

100

80

60

40

20

0

WAGE (Dollars per worker)

LABOR (Number of workers)

O

M

N

Given the company's marginal physical product of labor curve shown on the initial graph, line on the previous graph shows Gopher's demand for labor when the price of a shovel is $1.00, and lineshows Gopher's demand for labor when the price of a shovel is $2.00.