Question

In-Class Activity #7 Below table illustrates the production of a furniture manufacturing company in the short-run. Labor is the variable input and capital is the fixed input in the production. Assuming all worker has equal skill at work. Average Product Total Output 10) 0 (AP) Marginal product (MP) Labor Capital (L (K) . 05 5 2 5 5 5 48 68 80 78 5 Fill in the average product and marginal product cells in the table. When do you observe diminishing marginal return from labor in the production? Which worker can produce less additional unit than the previous? When do you observe the negative marginal return from labor in the production? What does it mean to the production? Comparing the production of 3 workers and the production of 4 workers, which combination is more productive? Suppose the cost of the rent of the capital is $20 per unit and the wage of labor is $40 per worker. Fill in the following cost table for this furniture manufacturing firm. Total Output Total Cost Total Fixed Cost Total Variable Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost Suppose the firm can sell their furniture at the price of $5.00 per unit in the market. What is the firm's total profit when they are hiring 5 workers in the production?

Answer 1

on = Foto 26 20 16 13 I 2 11 O Diministing marginal product foom. 4th worker 20 is less than 26 (MP) Negative marginal return 6th worker It means that adding the 6th worker diminishes total outfut rather than increasing it. 3 workers is more productive as for first 3; MP o increases When 4th ins cadded MP falls. increasene iv)