ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 7, Problem 5P
To determine
To Determine:
The point at which diminishing marginal returns set in.
Concept Introduction: At unit 4, marginal returns sets in because after unit 5 marginal product declines. Diminishing marginal returns means the MP of the variable input is falling and become negative. This happens when a unit increase in the variable input causes TP to fall.
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Question 1
Capital (K)
Labor (L)
Total Product (TP)
Average Product (AP)
Marginal Product (MP)
10
0
0
10
1
5
10
2
15
10
3
30
10
4
50
10
5
75
10
6
85
10
7
90
10
8
92
10
9
92
10
10
90
1.1 From the information in the table, calculate marginal and average product of each level of output.
1.2 At what point of output does diminishing marginal returns occur?
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(10) The law of diminishing returns states that:
(a) as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase.
(b) as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease.
(c) in the short run, the average total costs of the firm will eventually diminish.
(d) in the long run, the average total costs of the firm will eventually diminish.
Chapter 7 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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