The graph presented illustrates the relationship between the number of laborers (L) and the amount of pollution removed (in tons per year). This is an example of understanding diminishing returns in an economic context. **Graph Details:**- **X-axis (Horizontal):** Represents the number of laborers (L), ranging from 0 to 10.- **Y-axis (Vertical):** Represents the pollution removed in tons per year, ranging from 0 to 20. Two curves are shown:1. **APL (Average Product of Labor):** - Depicted by the red curve. - Initially increases, reaches a peak at around 6 laborers (where the pollution removed is highest), and then declines.2. **MPL (Marginal Product of Labor):** - Depicted by the blue curve. - Shows a similar trend, peaking earlier at around 4 laborers. - Beyond this point, the additional amount of pollution removed per additional laborer begins to decline.**Question:**The question posed asks: "In the graph, beyond which level of labor input do diminishing returns set in?"**Options:**- A. 4- B. 6- C. 8- D. 10- E. None of the above.**Explanation:**Diminishing returns occur when the MPL starts to decline after a certain number of laborers. According to the graph, this begins after 4 laborers, which corresponds to option A.This graph is an excellent tool for understanding the concept of diminishing returns, where adding more of one input (labor) leads to smaller increases in output (pollution removed).

Marginal product of labor (MPL) intersects the highest point of average product of labor(APL). The average product of labor measures the labor productivity. After the intersecting point of MPL and APL the labor productivity is decreasing, thus, diminishing return is set after 6th unit of labor.Thus, option B is the correct answer.

Answered: In the graph, beyond which level of…

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In the graph, beyond which level of labor input do diminishing returns set in? Pollution 20 Removed (tons per year) 16 12 APL MPL 2 8 Laborers (L) 10 OA. 4 Ов. 6 OC. 8 OD. 10 OE. None of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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