Question

1. Complete the following marginal product schedule for the following firm. Graph the TP and MP curves on separate graphs (using labor units as the horizontal axis in both graphs.) On your graphs, identify increasing, diminishing and negative returns.

Labor Units	Total Output	Marginal Product
0	0
10	50
20	110
30	180
40	260
50	330
60	390
70	440
80	480
90	510
100	530

Answer 1

Marginal Product can be calculated as under

Labor Units, L	Total Output, Q	Marginal Product, MPL=Change in Q/Change in L
0	0
10	50	5
20	110	6
30	180	7
40	260	8
50	330	7
60	390	6
70	440	5
80	480	4
90	510	3
100	530	2

We can see that marginal product is increasing till L=40. So, we can say that

Increasing marginal returns are observed for L 40

Marginal product is decreasing for L>40. So, we can say that

Decreasing marginal returns are observed for L> 40

There is no case of negative marginal product. So,

Negative marginal returns are not evident in given case