Download Midterm PDF

Title Midterm Economic Equilibrium Demand Price Elasticity Of Demand Supply And Demand Economic Surplus 141.8 KB 9
Document Text Contents
Page 8

Number Of
Workers

Output

0 0
1 50
2 110
3 300
4 450
5 590
6 665
7 700
8 725
9 710

10 705

10pts
16) The table above shows the weekly relationship between output and number of workers for a
factory with a fixed size of plant.
a. Calculate the marginal product of labor.
b. At what point does diminishing returns set in?
c. Calculate the average product of labor.
d. Find the three stages of production.

Answer:

A.
Number Of

Workers
Output MPL APL

0 0 0 0
1 50 50 50
2 110 60 55
3 300 190 100
4 450 150 112.5
5 590 140 118
6 665 75 110.833
7 700 35 100
8 725 25 90.625
9 710 -15 78.888

10 705 -5 70.5

B. The diminishing returns sets in at 4 workers.
C. APL = Q/L
D. The three stages of production:

Stage 1; up to the point where the APL reaches a maximum: 0-5 Workers
Stage 2; where the APL is declining and the MPL is positive. 5-8 Workers
Stage 3; where the MPL is negative. 9 and 10 workers.

10pts
17) Based on the table above, if the wage rate is \$500 and the price of output is \$5, how many workers
should the firm hire?

Answer: