Total, Average, & Marginal Products of Labor, K=2 (Table 8.2) Number of Total product (Q) Average product Marginal product workers (L) (MP-AQ/AL) (AP-Q/L) 0 - 1 52 52 52 2 112 56 60 3 170 56.7 58 4 220 55 50 5 258 51.6 38 6 286 47.7 28 7 304 43.4 18 8 314 39.3 10 9 318 35.3 4 10 314 31,4 -4 5-10 Total, Average, & Marginal Products K=2 (Figure 8.1) 350 300 250 200 100 50 thas of lobor Panel A Total produt 8-8 Marginel Avertige product 5678910 Unit of labor Panel 8-11 Q1 In the above graph 8.1 (Panel B), rising part of marginal product curve is called increasing marginal return phase T F Q2 In the above graph 8.1 (Panel B), falling part of marginal is called diminishing marginal return phase T F Q3 When marginal product falls, average product also start falling (though not immediately) after some time T F Q4 Marginal Product =AP when average product is maximum T F Q5 When marginal product curve falls, the MP>AP BTE F Look at the following numerical example(table 8.5 below) Average & Marginal Cost Schedules (Table 8.5) Output (Q) Average fixed cost Average Average total Short-run variable cost cost marginal cost (AFC-TFC/Q) (AVC=TVC/Q) (ATC-TC/Q= (SMC=ATC/AQ) AFC+AVC) 0 100 $60 $40 $100 $40 200 30 30 60 20 300 20 30 50 30 400 15 35 50 50 500 12 44 56 80 600 10 56.7 66.7 120 8-21 Q6 ATC(Average total cost)=AFC(Average fixed cost)+AVC(Average Variable cost) T F Look at the Marginal cost column above. We see that marginal cost declines till 300 units of output and there after rises. Graphically, as shown below, this means marginal cost curve is a U-shaped curve. Q7 The declining portion of MC curve corresponds to the rising portion of Marginal product curve(meaning that there is increasing marginal return phase) T F Q8 The rising portion of MC curve corresponds to the declining portion of Marginal product curve(meaning that there is diminishing marginal return phase) T F Look at the figure 8.4 below. Average & Marginal Cost Curves (Figure 8.4) Average and marginal costs (dollars) 20 120 100 SMC Co 80 ATC 60 40 20 20 AVC 100 200 300 400 500 600 Units of output Q9 When MC(SMC) falls, ATC will also fall T- F Q11 When MC(SMC) rises, it will pull up ATC also(though not immediately) T F Q12 MC will cut the ATC when ATC reaches the minimum level T F