The following table shows how the total output of skates (per month) changes when the quantity of the variable input (labour) changes. The firm's amount of capital is fixed.

a. Compute the average product of labour for each level of output and fill in the table. Plot the AP curve on a scale diagram.
b. Compute the marginal product of labour for each interval (that is, between 100 and 120 hours, between 120 and 140 hours, and so on). Fill in the table and plot the MP curve on the same diagram.
Remember to plot the value for MP at the midpoint of the output intervals.
c. Is the "law of diminishing marginal returns "satisfied?
d. Explain the relationship between the marginal product of labour and the average product of labour.

Transcribed Image Text:

Hours of Labour Pairs of Skates Average Marginal (per month) (per month) Product Product 100 120 140 160 180 200 220 240 200 260 350 580 720 780 800 810