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Level of Output

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Assume that the graph in the attached file illustrates the marginal, average variable and average total cost curves of a typical coffee grower and that the wholesale market for coffee beans is a perfectly competitive market.

A) As output expands, at what level of output does this grower first start to experience diminishing marginal productivity of labor? Explain your answer in 1or 2 sentences.

B) Assume that the current market price at the wholesale level is $5 per pound. How much coffee will this typical grower produce? Explain your answer in one or two sentences.

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Level of Output is studied in this case.

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A) As output expands, at what level of output does this grower first start to experience diminishing marginal productivity of labor? Explain your answer in 1or 2 sentences.

From the formula MP = W / MC, we know that the marginal productivity of ...

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