PS6 - METU Department of Economics Econ 101 Fall 2009...

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1 METU Department of Economics Econ 101 Fall 2009 PROBLEM SET # 6 PART A- PROBLEMS 1. The number of repairs produced by a computer repair shop depends on the number of workers as follows: # of Workers # of repairs (per week) 0 0 1 8 2 20 3 35 4 45 5 52 6 57 7 60 Assume that all inputs (office space, telephone, utilities) other than labor are fixed in the short-run. a. Add two additional columns to the table, and enter the marginal product (MP L ) and average product (AP L ) for each number of workers. Draw the MP L and AP L curves. b. Over what range of labor input are there increasing returns to labor? Diminishing returns to labor? Negative returns to labor? c. Over what range of labor input is marginal product greater than average product? What is happening to average product as employment increases over this range? d. Over what range of labor input is marginal product smaller than average product? What is happening to average product as employment increases over this range? 2. The following information represents TP, AP, and MP of PEDESTAL INC. # of Labor
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This note was uploaded on 01/05/2012 for the course ECON 101 taught by Professor Gulipektunc during the Spring '11 term at Middle East Technical University.

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PS6 - METU Department of Economics Econ 101 Fall 2009...

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