Use the production function below to answer the following questions: Units of La
ID: 1169641 • Letter: U
Question
Use the production function below to answer the following questions:
Units of Labor
Total Output
MP
0
0
1
5
2
15
3
30
4
42
5
52
6
60
7
65
8
67
9
63
10
55
a) Calculate marginal productivity (MP) and put this in the table.
b) At what level of employment does diminishing marginal productivity begin?
c) At what level of employment does marginal productivity become negative?
d) Why does marginal product become negative?
Units of Labor
Total Output
MP
0
0
1
5
2
15
3
30
4
42
5
52
6
60
7
65
8
67
9
63
10
55
Explanation / Answer
Units of Labor
Total Output
MP
0
0
1
5
5
2
15
10
3
30
15
4
42
12
5
52
10
6
60
8
7
65
5
8
67
2
9
63
- 4
10
55
- 8
(a) MP is calculated as difference between successive total output (total product values). Above table shows the MPs calculated.
(b) Diminishing MP starts from employment level of 4, when every increase in labor increases MP at a lower rate.
(c) MP becomes negative at 9 units of labor employed.
(d) Marginal product becomes negative when total product starts decreasing with addition of more inputs. This is an economc state where inefficiency sets in.
Units of Labor
Total Output
MP
0
0
1
5
5
2
15
10
3
30
15
4
42
12
5
52
10
6
60
8
7
65
5
8
67
2
9
63
- 4
10
55
- 8
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