13Ch+6+questions - Ch 6 Exercises 1- Suppose a chair...

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Ch 6 Exercises 1- Suppose a chair manufacturer is producing in the short run (with its existing plant and equipment). The manufacturer has observed the following levels of production corresponding to different numbers of workers: Number of chairs Number of workers 1 10 2 18 3 24 4 28 5 30 6 28 7 25 a. Calculate the marginal and average product of labor for this production function. The average product of labor, APL , is equal to Q/L The marginal product of labor, MPL, the change in output divided by the change in labor input. For this production process we have: L q APL MPL 0 0 __ __ 1 10 10 10 2 18 9 8 3 24 8 6 4 28 7 4 5 30 6 2 6 28 4.7 –2 7 25 3.6 –3 b. Does this production function exhibit diminishing returns to labor? Explain. Yes, this production process exhibits diminishing returns to labor. The marginal
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product of labor, the extra output produced by each additional worker, diminishes as workers are added, and this starts to occur with the second unit of labor. c. Explain intuitively what might cause the marginal product of labor to become negative. Labor’s negative marginal product for L > 5 may arise from congestion in the chair manufacturer’s factory. Since more laborers are using the same fixed amount of capital, it is possible that they could get in each other’s way, decreasing efficiency and
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This note was uploaded on 01/17/2012 for the course ECON 100A taught by Professor Safarzadeh during the Fall '09 term at UC Irvine.

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13Ch+6+questions - Ch 6 Exercises 1- Suppose a chair...

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