. The following table summarizes the short-run relationship between a firm\'s to
ID: 1095498 • Letter: #
Question
. The following table summarizes the short-run relationship between a firm's total labor input and its total output. (9 points)
Labor Input
Total Product
Marginal Product
Average Product
0
0
1
20
2
46
3
75
4
102
5
125
6
138
7
140
8
136
a. Fill in the columns labeled "Marginal Product" and "Average Product."
b. Over what range of labor input does the firm experience increasing marginal returns? Diminishing marginal returns? Negative marginal returns?
c. Comparing marginal product to average product, under what circumstances will average product rise? Under what circumstances will average product fall?
Labor Input
Total Product
Marginal Product
Average Product
0
0
1
20
2
46
3
75
4
102
5
125
6
138
7
140
8
136
Explanation / Answer
Marginal product is derived by subtracting the consecutive total product.
b) Increasing marginal returns happen till the marginal product is increasing. This happens till 4th quantity.
Dimnishing returns starts when the marginal or average product starts falling. This happens after 4th unit or from 5th unit.
Negative marginal returns starts when the marginal product become negative. This happens from 8th output.
c) When there is increasing returns the marginal product is greater than average product. When there is decreasing returns the average product is greater than marginal product.
When there is increasing returns both nmarginal and average product rise, when there is dimnishing returns both average and marginal product fall.
Q Total Product Marginal product Average product (TP/Q) 0 0 0 0 1 20 20 20 2 46 26 23 3 75 29 25 4 102 27 25.5 5 125 23 25 6 138 13 23 7 140 2 20 8 136 -4 17Related Questions
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