number rises from one to two barbers, output increases from 16 to 40, a marginal gain of 24. From that point

on, though, the marginal product diminishes as we add each additional barber. For example, as the number of

barbers rises from two to three, the marginal product is only 20; and as the number rises from three to four,

the marginal product is only 12.

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7.3 • Costs in the Short Run 169

To understand the reason behind this pattern, consider that a one-man barber shop is a very busy operation.

The single barber needs to do everything: say hello to people entering, answer the phone, cut hair, sweep, and

run the cash register. A second barber reduces the level of disruption from jumping back and forth between

these tasks, and allows a greater division of labor and specialization. The result can be increasing marginal

productivity. However, as the shop adds other barbers, the advantage of each additional barber is less, since
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