1. You own a business producing cups for the market. You hire workers to produce the cups. You hire workers to produce the cups. Your total products is given by:

Workers	Total product
0	0
1	100
2	220
3	300
4	360
5	400
6	420
7	430

Answer the following questions:

1. What is the marginal product and average products of workers?
2. At what range of workers does marginal product increase?
3. When marginal product increases, is average product greater than, less than or equal to marginal product?

Now use the above table to;

Suppose your daily rent is $120. You pay workers $100 a day to produce the cups and you pay $80 a day for a machine you use in production.

1. What is your total cost and average total costs of producing 300 cups a day?
2. What is the marginal costs of producing 380 cups?
3. At what output your average total cost a minimum?

The objective of the firm's owner may not be the same as a manager. Such relationship gives rise to the "agency problem." For a manager, he/she may face similar problem but with the employees. Think of yourself of being a manger supervising large number of employees and you are faced with the need to improve productivity due to market competition. If you must develop a strategy for increasing productivity through better relationships with your employees, how do you go about building such a strategy?