Exhibit 22-8 Units of Labor Units of Output 0 0 1 50 2 110 3 155 4 185 5 205 Exhibit 22-8 shows how output varies with the only variable input used in its production. Marginal physical product of the fifth unit of labor is

20

Explanation:

Marginal physical product can be defined as a change in the physical product as a result of an extra unit of labor input , assuming the quantities of other input remain constant.

This is calculated by dividing the change in physical product by the change in the unit of labor.

Workings

        Units of labor             Units of physical products

                   0                                      0

                   1                                       50

                   2                                      110

                   3                                      155

                   4                                       185

                   5                                       205

4 units of labor = 185

5 units of labor = 205

Marginal physical product = 205-185/1

=20

(a) when insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.

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