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With Layoffs, NPR Becomes Latest Media Outlet to Cut Jobs

EconEye Admin

With the erosion of advertising dollars, NPR’s revenues are expected to fall more than $30 million short of expenditures. CEO John Lansing announced the network would lay off roughly 10% of its current workforce—at least 100 people.—npr.org

Answer the following questions to check your understanding of the story.

What does National Public Radio (NPR) produce and how will the layoffs change NPR’s total product and marginal product?

NPR produces _____________, and the layoffs will ____________.

Wrong! - How does NPR earn revenue? What happens to NPR’s total product when it has fewer employees? How does marginal product change?

Correct! - NPR provides news programs and podcasts to the public at no cost, but it earns revenue by producing advertising services. With layoffs, fewer employees will produce less advertising services and total product will decrease. All production eventually experiences diminishing marginal returns, so when the layoffs occur, NPR will experience an increase in marginal product.

How will the layoffs affect NPR’s costs?

The layoffs will ____________.

Wrong! - Is the cost of labor a variable cost or a fixed cost? How is total cost calculated?

Well Done! - The cost of labor is a variable cost, so when NPR lays off employees, its total variable cost decreases with no change to total fixed cost. Total cost is the sum of total variable cost and total fixed cost, so total cost decreases.

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