Answer to Question #158484 in Microeconomics for nfraser

Question

1.      Complete the table and answer the questions which follows.

Labour Total Product (TP) Average Product (AP) Marginal Product(MP)

1 80

2 170

3 270

4 368

5 430

6 480

7 504

8 504

9 495

10 480

Plot the total product curve

(a)   Plot the marginal product curve and indicate the following:

(i)                 B- where Total product is maximized

(ii)               A – where Total product is increasing

(iii)              C- where Total product is decreasing

(b)  Where diminishing marginal return does occur? 

Answer 1

1) Average Product (AP) can be calculated as follows:

$$AP_L=\dfrac{Q}{L}.$$

Marginal Product(MP) can be calculated as follows:

$$MP_L=\dfrac{Q_1-Q_0}{L_1-L_0}.$$

After calculations we get the following table:

Let's plot the total product curve:

(a) Let's plot the marginal product curve:

Here in graph indicated the following:

(i) B- where Total product is maximized;

(ii) A – where Total product is increasing;

(iii) C- where Total product is decreasing.

(b) Let's plot average product and marginal product curves:

As we can see from the graph, the stage of production where the diminishing marginal return occurs begin from the point where MP and AP curves intersect and ends where MP curve intersects x-axis.