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Estimations of production

a. Calculate the marginal product of labor.
b. At what point does diminishing returns set in?
c. Calculate the average product of labor.
d. Find the three stages of production.

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Marginal cost of output are additional cost incurred in producing an additional output.
Variable costs are costs which changes directly in proportion to the level of sales in dollars or units sold. For example direct material, direct labor, sales commission, bonus etc.
Fixed costs are those costs which remain the same irrespective of the production or sales level.

Number of Average Average
Worker Hours Output Marginal Product Fixed Variable Total Marginal Variable Total
Cost Cost Cost Cost Cost Cost
0 0 0 20,000 0 20,000 20,000 NA NA
50 400 400 20,000 250 20,250 250 5 50.63
100 900 500 20,000 500 20,500 250 5 22.78
150 1300 400 20,000 750 20,750 250 5 15.96
200 1600 300 20,000 1000 21,000 250 5 13.13
250 1800 200 20,000 1250 21,250 250 5 11.81
300 1900 100 20,000 1500 21,500 ...

Solution Summary

Marginal cost of output are encompassed.

$2.19