Question

1. The following table shows the production function of a firm

Input (Number of machines)	Total output	Marginal product
0	0
1	10
2	35
3	70
4	120
5	165
6	175
7	170
8	155

1. Calculate the marginal product of the firm at each level of input.
2. Where does diminishing marginal product start?

Answer 1

The marginal product is the additional output produced with an additional unit of input. It is the ratio of change in total output over the change in input units.

Using this formula, we can calculate the value of the marginal product for all levels of input units.

b.) Diminishing marginal product is when the marginal product starts diminishing.

As we can see that Marginal product (MP) starts decreasing after 4 units of input employed. That is after 4 units of inputs, the MP keeps diminishing.

At 4 unit of input employed, Marginal product = 50

At 5 unit of input employed, Marginal product = 45

Therefore marginal product starts diminishing at this point and keeps diminishing.

After 4 units of input employed, the Diminishing Marginal product starts.