Question
In: Economics
The short-run production function for a manufacturer of DVD drives is as follows:
The short-run production function for a manufacturer of DVD drives is as follows:
Number of Workers (Quantity of Labor) Total Output of DVD Drives
0 0
1 7000
2 20000
3 30000
4 36000
5 40000
6 42000
Calculate the average product (AP) at each quantity of labor.
Calculate the marginal product (MP) at each quantity of labor.
After which worker do diminishing marginal returns set in?
In the region of diminishing marginal returns, what is happening to marginal cost? Explain.
Solutions
Expert Solution
a) & b) Ans:
|
Number of workers (Quantity of Labor) |
Total Output of DVD Drives | AP | MP |
| 0 | 0 | -- | -- |
| 1 | 7000 | 7000 | 7000 |
| 2 | 20000 | 10000 | 13000 |
| 3 | 30000 | 10000 | 10000 |
| 4 | 36000 | 9000 | 6000 |
| 5 | 40000 | 8000 | 4000 |
| 6 | 42000 | 7000 | 2000 |
Explanation:
AP = Total Product / Number of workers
MP = Change in Total Product / Change in Number of workers
c) Ans: After 2nd worker diminishing marginal returns sets in.
d) Ans: In the region of diminishing marginal returns, marginal cost increases. Becuase marginal product and marginal costs are inversely related.
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