Question

Consider Table 1 below. Assume for simplicity that fertiliser and land are the only two inputs required in the production process. Using a relevant economic concept, describe the patterns observed in the data for marginal product. Give a very brief explanation of your answer.

Table 1: Short-run scenarios

(1) Fertiliser (tonnes)	(2) Land (ha)	(3) Total product (tonnes)	(4) Marginal product (tonnes)
0	10	100	n.a.
1	10	125	25
2	10	155	30
3	10	190	35…..
4	10	220	30
5	10	240	20…..
6	10	250	10
7	10	250	0…..
8	10	245	-5…..

Answer 1

Answer - This is a short run production function where land and fertilizers are two factors of production. Land is the fixed factor of production and fertilizer is the variable factor of production. In the given table quantity of land is fixed at 10 hectares. Producer increase the amount of fertilizer which leads to increase in total product. Total output increase till 6th unit of fertilities employed. 7th unit of fertilizer does not add anything to the output. 8th unit reduce output by 5 tons.

In the above data we see that TP increases till marginal product is positive. TP becomes maximum when MP is equal to zero. TP starts falling when MP becomes negative. A diagram has been given below. In the diagram output is measured on vertical axis and amount of fertilizer are measured on horizontal axis. TP is maximum when MP is zero.