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1. What is the formula for calculating the Marginal Product of Labor (MP)? 2. What is the formula for calculating the Average2. Wllal IS LIC III UI Lie ou WUIACI ! 10. MP is greater than the AP for workers A. 2-5 B. 2-4 C. 6-10 D. 8-10 11. MP is less16. When MP>AP then A. AP is increasing B. AP is decreasing C. AP is at a maximum D. AP is at a minimum

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Answer #1
  1. The formula for Marginal Product (MP) is

MP = Change in Total Product (TP)/Change in Labor

  1. The formula for Average Product (AP) is

AP = Total Product (TP)/ Labor

Labor

Total Product

Marginal Product = Change in TP/Change in Labor

Average Product = Total Product/Labor

0

0

1

20

20

20.0

2

45

25

22.5

3

80

35

26.6

4

125

45

31.3

5

165

40

33.0

6

192

27

32.0

7

213

21

30.4

8

231

18

28.8

9

243

12

27.0

10

250

7

25.0
  1. The total product of 2 workers is 45 units.
  2. At Labor = 1 or employment of 1 labor input, the marginal product equals average product and total product.
  3. MP of 4th worker is 45 units.
  4. AP of 5th worker is 33 units.
  5. Diminishing returns starts when the 5th worker is hired.
  6. Total Product (TP) of 6 workers is 192 units.
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