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Unformatted text preview: a short-run phenomenon that will persist only as long as there are fixed factors of production; in the long-run, it will be possible to vary the amount of the fixed factor capital so as to eliminate the problem of diminishing returns. Table 1 provides a simple numerical example. When the firm combines its fixed unit of capital with one worker, its total product increases from 0 units to 5 units of the good. The marginal product of the first worker is therefore 5 (5 - 0 = 5). If the firm adds a second worker, its total product increases to 15; the marginal product of the second worker is therefore 10 (15 - 5 = 10). Continuing in this manner, it is possible to determine the marginal product of every worker that the firm hires....
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- Fall '10