Final Revision

Use the following information to explain all sub-sections of question 2.

Karon runs a bread bakery. When she employs 1 person, she produces 1,000 loaves of bread a week. When she hires a second worker, her total product is 2,000 loaves of bread. Her total product is 4,000 loaves a bread when she hires a third worker. When she hires a fourth worker, her total product increases but by only 1,000 loaves of bread. Karon pays $1,250 a week for equipment and $500 a week to each worker she hires.

a)Construct Karon's marginal product and average product schedules by filling the table below. Over what range of workers does Karon experience increasing marginal returns?