A catering company prepared and served 250 meals at an anniversary celebration last week using 7 workers. The week before, 8 workers prepared and served 200 meals at a wedding reception. A) For which event was the labor productivity higher?
B) What are some possible reasons for the productivity differences?

A) For which event was the labor productivity higher?

Productivity is defined as the capacity to produce with a set amount of inputs, these inputs being workers and capital. A higher productivity occurs when more output is produced with the same or less amount of inputs.

Labor productivity was higher for the the anniversary celebration last week because with 7 workers, the catering company managed to serve 250 meals. Meanwhile, the week before, with 1 more worker (8 in total), the company only served 200 meals.

B) What are some possible reasons for the productivity differences?

The reasons can be very varied. One common reason though is the law of diminishing marginal product. This economic law establishes that there is an optimal amount of workers to employ in an economic activity, and any amount above or below will be less productive.

In this case, the optimal amount may have been 7 workers, and adding the 8 worker could have created a productivity loss represented by the lesser production.