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    Calculating average and marginal product

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    According to data obtained by the U.S Department of Agriculture, the relationship between a cow's total output of milk and the amount of grain it is fed is as follow:

    Amount of Grain(Pounds) Amount of Milk(Pounds)

    1,200 5,917

    1,800 7,250

    2,400 8,379

    3,000 9,371

    (This relationship assumes that forage input is fixed at 6,500 pounds of hay.)

    (a) Calculate the average product of grain when each amount is used.
    (b) Estimate the marginal product of grain when between 1,200 and 1,800 pounds are fed, when between 1,800 and 2,400 pounds are fed, and when between 2,400 and 3,000 pounds are fed.
    (c) Does this production function exhibit diminishing marginal returns?

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    Solution Preview

    Please refer attached file for better clarity of expressions.

    (a) Calculate the average product of grain when each amount is used.
    Amount of Grain (Pounds),G Amount of milk (Pounds), M Average Product=M/G
    1200 5917 4.93
    1800 ...

    Solution Summary

    Solution depicts the steps to calculate average and marginal product.