Sub: Economics Topic: Micro Economics

Question:

Given the table of number of workers and total output, calculate average and
marginal product, and determine whether the production values consistent with
the law of diminishing marginal productivity.

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You have been hired by the Tootsie Roll Company to analyze their production
process. The previous analyst left you with the following table:

Total Output
(thousands of bags of
Number of Tootsie Rolls) Marginal Average
Workers Product Product
0 0
1 4
2 10
3 17
4 23
5 28
6 31
7 32
8 32
9 30
10 25

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 Sub: Economics Topic: Micro Economics

a. Fill in the blank values in the table above.

b. Do the values in the table represent short-run or long-run production

relationships? Explain.

c. Are these production values consistent with the law of diminishing marginal
productivity? Explain.

d. Between what levels of output is the firm most likely to operate? Explain
your answer.

Solution:

Number of Total Output ("000") of Marginal Product Average Product

Workers bags tootsie rolls
0 0 0 0.00
1 4 4 4.00
2 10 6 5.00
3 17 7 5.67
4 23 6 5.75
5 28 5 5.6
6 31 3 5.17
7 32 1 4.57
8 32 0 4.00
9 30 -2 3.33
10 25 -5 2.50

** End of the Solution **

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Finance, Marketing, Statistics, Economics and others. Check out more solved problems in our Solution Library.

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*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.