Answer to Question #210931 in Microeconomics for Aimash

Question

Q: 1 Suppose that you are running a fast food chain business on a small stand near the Lake view park Islamabad. It’s a rainy day, and customers are lined up for burgers at your small stand. The following table shows your firm’s short-run production function for burgers.​​ (10)

Number of workers

Total Output

1

20

2

50

3

75

4

90

5

100

6

105

7

100

8

90

 

When does diminishing marginal product begin? How many workers are too many? Use marginal product to decide

Answer 1

Diminishing marginal product begins at the point where the total number of workers is seven and total output is 100. Seven workers are too many because it is at the point of seven workers where total output starts declining and marginal product starts going towards the negative.