The following table related to an example of the theory of production calculating the marginal product and the average product.

No. of Workers Total Production Marginal Product Average Product

0 0

1 30

2 64

3 102

4 130

5 148

6 160

7 166

8 164

A. Two graphs: in the first graph represent the total production, in the other graph represent the marginal production and average production. Explain the relationship between each pair of curves.

B. Explain each of the three observed levels of marginal product.

C. What is the influence of the law of diminishing returns on production costs in the short run? Explain.

Part II- Evaluate the economic efficiency and equilibrium of a company that has fixed costs of $ 80.00 and variable costs as indicated in the table.

Total Production Fixed Cost Variable Cost Total Cost Average Fixed Cost (CPF)

0 0

1 60

2 100

3 135

4 165

5 200

6 240

7 285

8 340

9 405

10 480

Average Variable Cost (CPV Average Total Cost (CPT) Marginal Cost (CMg

A. A graph to represent the total fixed cost, the total variable cost, and the total cost of the business. Explain how the law of diminishing returns influences the shapes of the variable cost and total cost curves.

B. Produce a graph for the CPF, CPV, CPT, and CMg. Explain how it is calculated, the shape of each of these four curves, and the relationships between them.

C. Explain how the location of each curve on the graph would be altered if the total fixed cost changes to $ 110.00 instead of $ 80.00.