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A small factory is producing in the short run with one fixed input, capital. The manufacturer has recorded the following levels of units output corresponding

A small factory is producing in the short run with one fixed input, capital. The manufacturer has recorded the following levels of units output corresponding to different numbers of units of labour.

Units of Labour

Units of Output

APL

MPL

1

8

2

15

3

22

4

28

5

31

6

28

7

26

8

22

  1. Calculate the marginal and average product of labor for this production function and complete the table. (5 points)
  2. Does this production function exhibit diminishing returns to labor? Explain. (2.5 points)
  3. What might cause the marginal product of labor to become negative? Explain. (2.5 points)

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