An SMSE has a production process with fixed lot size A. The table below

shows the total output and the number of workers:

No. of Workers (L) Total Output (Q)

0 0

1 10

2 30

3 50

4 56

5 59

6 60

7 60

8 58

(a) Determine marginal productivity of labour and average productivity of labour for each unit of labour.

(b) Show the three stages of production

(c) Suppose the market price of the output Rs. 150 and the wage rate is Rs. 900, how many workers would this firm hire? What if the price

decreases to Rs. 100?

(d) Suppose the market price increases to Rs. 250, what is the highest wage rate the firm would be willing to pay to employ 4 units of labour?

(include equations, graphs where ever needed