Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 7, Problem 5P
To determine
To Determine:
The point at which diminishing marginal returns set in.
Concept Introduction: At unit 4, marginal returns sets in because after unit 5 marginal product declines. Diminishing marginal returns means the MP of the variable input is falling and become negative. This happens when a unit increase in the variable input causes TP to fall.
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(Production in the Short Run) Complete the following table. At what point does diminishing marginal returns set in?
Units of the
Variable Resource Total Product Marginal Product
0 0 —
1 10 —
2 22 —
3 — 9
4 — 4
5 34 —
Question 1
Capital (K)
Labor (L)
Total Product (TP)
Average Product (AP)
Marginal Product (MP)
10
0
0
10
1
5
10
2
15
10
3
30
10
4
50
10
5
75
10
6
85
10
7
90
10
8
92
10
9
92
10
10
90
1.1 From the information in the table, calculate marginal and average product of each level of output.
1.2 At what point of output does diminishing marginal returns occur?
Question 3
Consider a corn farmer with one acre of land. In addition to land, other factors include quantity of seeds, fertilizer, water, and labor. Assume the farmer has already decided how much seed, water, and labor he will be using this season. He is still deciding on how much fertilizer to use.
Units of Fertilizer
Total Ears of Corn
Marginal ears of Corn
1
100
2
250
3
425
4
550
5
600
6
525
(a) Determine the marginal ears of corn and complete the table.
(b) At what point does diminishing returns set in for the farmer? Justify your response.
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Similar questions
- What are diminishing marginal returns as they relate to costs?arrow_forwardHow do we calculate marginal product?arrow_forward( Relationship Between Marginal Cost and Average Cost ) Assume that labor and capital are the only inputs used by a firm. Capital is fixed at 5 units, which cost $100 each per day. Workers can be hired for $200 each per day. Complete the following table to show average variable cost ( AVC ), average total cost ( ATC ), and marginal cost ( MC ).arrow_forward
- Question-1 (Profit maximization) A firm has two variable factors and a production function f(x1,2) = 6x1223. The price of its output is 3, the price of factor 1 is 3, and the price of factor 2 is 2. What is the optimal production output level? - What is the maximum profit-level?arrow_forward*need correct answer for this practice question plzarrow_forward(10) The law of diminishing returns states that: (a) as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase. (b) as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease. (c) in the short run, the average total costs of the firm will eventually diminish. (d) in the long run, the average total costs of the firm will eventually diminish.arrow_forward
- 11. A graph shows quantity of output produced on the horizontal axis and shows total variable cost and total cost on the vertical axis. Which of the following is true about the vertical distance between total variable cost and total cost as output increases? (A) It decreases. (B) It remains constant. (C) It increases. (D) It decreases and then increases. (E) It increases and then decreases.arrow_forwardExercises Calculate the marginal product Total Marginal Product Production Labor Product or Alternative Inputs Output A na B 1 10 10 C 2 25 45 60 70 75 75 70 E 4 5 H 7 Please fill in the blank cells and answer the questions below. Click to see the answers. Alternative Number of Workers Output Marginal Product na B 1 200 2 500 825 1000 300 4 1125 1225 H. 7 1200 1050 8. At what point does diminishing marginal returns set in? At what point does negative MP occur? N3arrow_forward(workers) (boxes/day) 0 0 1 4 2 9 3 16 4 24 5 32 6 39 7 45 8 50 9 54 10 57 11 59 12 60 The cost of labor is $120/worker per day. The cost of capital is $300/day Plot accurately (use a graphing program) the following diagrams. Please put titles on the axes. a. The total product curve. b. The marginal product and average product curves (on the same diagram). Remember that marginal product represents a change and should be plotted at the midpoints e.g. the marginal product of the third worker should be plotted at 2.5 on the labor axis. c. The total cost curve. d. The marginal cost, average variable cost and average cost curves (on the same diagram). Remember that marginal cost represents a change and should be plotted at the midpoints.arrow_forward
- Question 31 Explain what a production function is. What is the concept of diminishing marginal product?arrow_forwardUse the following information to answer question 22-23. Number of Workers Hired 4 5 6 7 00 Number of Meals Sold 60 140 230 300 320 Question 22 Diminishing marginal returns set in when the process.... a) fourth b) sixth c) seventh d) eighth worker is added to the production 4arrow_forward1. The following is a production schedule of a certain firm. Fill the missing value for average product (AP) and marginal product (MP). Land Labor TP AP MP 1 1 1 6 1 2 16 1 3 24 1 4 30 1 34 1 34 1 7 32 1 8 26arrow_forward
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