2. The law of diminishing marginal returns Eric's Performance Pia is a small restaurant in New York City that sells glutenFree pias. Eric's very tiny kitchen has barely enough room For the four ovens in which his workers bake the pines. Eric signed a lease ohligating him to pay the rent for the four ovens for the next year. Because of this, and because Eric's kitchen cannot t more than four ovens, Eric cannot change the number of ovens he uses in his production of pizzas in the short run. However, Eric's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Eric lets them know how many workers he needs for each day of the week. In the short run, these workers are 7 resources, and the ovens are v resources. vari able Eric's daily production schedule is presented in the following table. \fOn the following graph, plot Eric's production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0). 300 4 270 Production Function 240 210 180 150 QUANTITY OF OUTPUT (Pizzas) 120 30 F 1 2 LABOR HIRED (Number of workers)Suppose that labor is Eric's only variable cost and that he has a xed cost of $50 per day and pays each of his workers $40 per day. Use the orange points (square symbol) tD piot Eric's total cost curve on the mllowr'ng graph using the quantities from the preceding tabte. 3m 270 Total Cost 2-10 210 TOTAL COST (Dollars) 3 E 59' E 3 E D an an m1m1m1m2102m2m3m QUANTITY OF OUTPUT (Pizzas) The lawI of diminishing marginal product of labor is demonstrated by which of the following? Q Total output increases at a decreasing rate as you increase the quantiti,r of labor. Q Total output declines as you increase the quantity of labor. Q Total output increases only when you increase both labor and ovens