Share
Explore BrainMass

# Behavior of Profit-Maximizing Firms

The number of repairs produced by a computer repair repair shop depends on the number of workersas follows:

NUMBER OF WORKERS NUMBER 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, and utilities) other than labor are fixed in the short run.

a) Add two additional columns to the table and enter the maginal product and average product for each number of workers.
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 happenning 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 happenning to average product as employment increases over this range?

#### Solution Preview

The Production Process: The Behavior of Profit-Maximizing Firms
The number of repairs produced by a computer repair repair shop depends on the number of workersas follows:

NUMBER OF WORKERS NUMBER OF REPAIRS
(PER WEEK)
0 0
1 ...

#### Solution Summary

Solution discusses Behavior of Profit-Maximizing Firms

\$2.19