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Average and Marginal Products, Diminishing Returns

Problem:

The short run production function for a manufacturer of DVD drivers is as follows:
Input of Labor (workers per week) Total output of DVD drivers
0 0
1 25
2 60
3 85
4 105
5 115
6 120

Based on the information, calculate the averae physical product at each quantity of labor.

Part 2.
Using the information provided in the attachment calculate the marginal physical product of labor at each quantity of labor.

Part 3.
From the manufacturer of DVD drivers from part 1 and 2, at what point do diminshing marginal returns set in?

Attachments

Solution Preview

Please refer attached file for better clarity of tables and formulas.

Solution:

Part1.
The short run production function for a manufacturer of DVD drivers is as follows:  
Based on the information, calculate the averae physical product at each quantity of labor.

Input of Labor -L Total output of DVD drivers-Q Average Product=Total Output/Input of labor
(Workers Per week)
0 0 -
1 25 25.00
2 60 30.00 Maximum AP
3 ...

Solution Summary

Solution describes the steps for calculating average and marginal product of DVD's. It also identifies the point where diminishing returns take place.

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