4 Use the table below to answer the following questions Numb

4. Use the table below to answer the following questions Number ef shoes a: What is the marginal product of the third worker? Labor Per dayproduced per day b. At what level of labor per day does diminishing marginal productivity set in? 12 21 29 35 39 39 35 3 4 c. In what range (of labor per day) will this firm operate?

Solution

Marginal product (MP) is the difference of total product (TP) in two consecutive units.

The following table shows MP at different labor units:

Labor

TP

MP

1

5

5 – 0 = 5

2

12

12 – 5 = 7

3

21

21 – 12 = 9

4

29

29 – 21 = 8

5

35

35 – 29 = 6

6

39

39 – 35 = 4

7

39

39 – 39 = 0

8

35

35 – 39 = -4

a.

Answer: MP of labor 3 is 9 units.

b.

Answer: 4^th labor

Diminishing marginal productivity is the start of decreasing MP. It starts from 4^th labor, because MP of that row is 8 units that are lower than just previous row (9 units).

c.

Answer: Range = 1 labor to 7 labors

Firm will continue its operation till the MP reaches at 0, because TP reaches the maximum at (MP = 0) level and after that it becomes negative.

Labor	TP	MP
1	5	5 – 0 = 5
2	12	12 – 5 = 7
3	21	21 – 12 = 9
4	29	29 – 21 = 8
5	35	35 – 29 = 6
6	39	39 – 35 = 4
7	39	39 – 39 = 0
8	35	35 – 39 = -4