Assignment 1, Ch.10 production

Number of

Workers Output

(X) (Q

0 0

1 1000

2 2500

3 4500

4 6000

5 7000

6 7500

7 7800

8 8000

P= product price = $2

W= Cost per unit of labor = $1000

MRP = MP P

TLC = X W

MLC = TLX/X

1) The table above shows the weekly relationship between output and number of workers for a factory with a fixed size of plant.

a. Calculate AP, MP, TRP, MRP, TLC, MLC, (TRP-TLC) And (MRP- MLC).

b. At what point does diminishing returns set in?

c. Using (TR-TC) approach, what is the maximum number of workers to attain maximum profit. Why?

d. Using (MR-MC) approach, what is the maximum number of workers to attain maximum profit.

e. Do you agree to hire the seventh worker? Why?