Econ 550 Assignment 1

Econ 550 Assignment 1 - Use the information from the...

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Econ 550 Assignment 1 G Francis T Assignment 1 Complete the table (Table 1) below, then draw the following curves: Short-run average product (AP) curve; Short-run marginal product (MP) curve. Table showing the Average and Marginal product of labour for a hypothetical firm Amount of labour( units) | Amount of capital(No. of machines) | Output of parts(Q, hundreds of parts) | Average product (Q/L) | Marginal product(∆Q/∆L) | 0 | 5 | 0 | - | - | 1 | 5 | 49 | 49 | 49 | 2 | 5 | 132 | 66 | 83 | 3 | 5 | 243 | 81 | 111 | 4 | 5 | 376 | 94 | 133 | 5 | 5 | 525 | 105 | 149 | 6 | 5 | 684 | 114 | 159 | 6.666 | 5 | 792.59 | 120.09 | 163.05 | 7 | 5 | 847 | 121 | 164.88 | 8 | 5 | 1008 | 126 | 161 | 9 | 5 | 1161 | 129 | 153 | 10 | 5 | 1300 | 130 | 139 | 11 | 5 | 1419 | 129 | 119 |
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12 | 5 | 1512 | 126 | 93 | 13 | 5 | 1573 | 121 | 61 | 14 | 5 | 1596 | 114 | 23 | 15 | 5 | 1575 | 105 | -21 |
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Unformatted text preview: Use the information from the completed table and the graphs to identify the three stages of production and explain why the firm’s short run production has only one ‘rational’ stage of production. Assignment #1 Series 1=AP Series 2 = MP Stages of Production: In the first stage of production the variable input, or units of labor, are being used with increasing output per unit. One can clearly see that production peaks at 10 units of labor. Here the AP is 130, just before it begins to decline. The second stage of production is marked by a slowing in the increase of output. The average and marginal product are declining. This begins at 11 units of labor. Finally, the third stage of production is the phase when variable units are over utilized. At 15 units of labor the MP is negative. This is the rational stage of short term production this particular firm is in....
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Econ 550 Assignment 1 - Use the information from the...

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