You are planning to estimate a short-run production function for your firm, and you have...
Question:
You are planning to estimate a short-run production function for your firm, and you have collected the following data on labor usage (L) and output (Q).
| Labor Usage (L) | Output (Q) |
|---|---|
| 3 | 1 |
| 7 | 2 |
| 9 | 3 |
| 11 | 5 |
| 17 | 8 |
| 17 | 10 |
| 20 | 15 |
| 24 | 18 |
| 26 | 22 |
| 28 | 21 |
| 30 | 23 |
a. Obtain the average product (AP) function and marginal product (MP) function.
b. Calculate estimates of average products (AP) and marginal products (MP) when the firm employs 20 workers.
Marginal Product:
Marginal Product is an economic measure which shows the increase in level of output due to increase in the amounts of inputs used. It basically shows, by how much the level of output increases, due to one unit increase in amount of input. It is helpful in deciding the level of production to be maintained.
Answer and Explanation: 1
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View this answer1. Average Product = Total Product/ Number of Labours
Here, the Total product can be represented as, Q and labors can be represented as L
Thus, the...
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Total Product, Average Product & Marginal Product in Economics
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Chapter 4 / Lesson 2
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In Economics, there are three factors involved in the theory of production: total product, average product, and marginal product. Explore this theory and learn how to maximize the efficiency of these production tools.
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