ECO101H1 Lecture 17: ECO101H1 Lecture 17
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The table below describes the total product of a firm. Fill in the missing values, a) - u), by calculating marginal product and average product.
1 | 2 | 3 | 4 |
Units of the variable resource (Capital) | Total Product (TP) | Marginal Product (MP) | Average Product (AP) |
0 | 0 | a | - |
1 | 1 | b | l |
2 | 3 | c | m |
3 | 6 | d | n |
4 | 10 | e | o |
5 | 15 | f | p |
6 | 18 | g | q |
7 | 20 | h | r |
8 | 19 | i | s |
9 | 17 | j | t |
10 | 13 | k |
u |
Refer to the table from above.
a. List the units of capital exhibit increasing marginal returns?
b. List the units of capital exhibit decreasing marginal returns?
c. List the units of capital exhibit negative marginal returns?
8. Describe how the total product and average product curves change as a firm moves from increasing to diminishing to negative marginal returns.
9. Does the law of diminishing returns mean that, as a firm hires additional workers, each of those workers is successively worse at doing their job? Why or why not?
1) Which of the following inputs can be changed in the short run?
Land owned |
Labor employed |
Machinery |
Office Space |
2) In a perfectly competitive market:
price is always equal to marginal revenue. |
price is always greater than marginal revenue. |
price is always greater than marginal cost. |
price is always equal to marginal cost. |
3) The following table shows the total output, number of workers employed, variable costs, and fixed costs of a firm.
Number of Workers | Total Output (units) | Variable Costs ($) | Fixed Costs ($) |
0 | 0 | 0 | 150 |
1 | 25 | 10 | 150 |
2 | 55 | 20 | 150 |
3 | 86 | 30 | 150 |
4 | 110 | 40 | 150 |
5 | 130 | 50 | 150 |
6 | 145 | 60 | 150 |
7 | 155 | 70 | 150 |
8 | 160 | 80 | 150 |
Refer to the table above. Suppose that the only variable input that the firm uses is labor. What is the wage paid to a worker in the firm?
4) A firm produces 200 units of a good when it employs 7 workers. The marginal product of the eighth worker is 46 units. If the eighth worker is hired, the firm's total product will increase to:
246 units. |
208 units. |
322 units. |
228 units. |