Question

16 According to the talde bekw, diminishing returns occur when he Labor Total Product worker Part II: Solving Problems Problem 1 - 20 points This que esploma the short-rand o appe n a perfectly competitive wow. A thirt B the second ge • Fill in the remaining e s table combattal in the table above for total costs, rage lets. , darilo. Rad to the south is . The price of a case of paper is 50. Seing that he can't make a prodit, manager Mbad Sett decides to shut down operations. What are the firm's p o ss! Was this a wise decision? Explant You may want to calculate pro ach quity) • Vagy membering his tradictory , w at to them Schuttle Michel Scott it is better to produc er, b D e l mar al costat that grantityWhat the formal prot of peodotion Wis this the best decision? Explain D he i nal t that level a

Answer 1

1)

Labor	TP	MP
0	0
1	5	5
2	13	8
3	18	5
4	22	4
5	24	2

MP = Change in TP/change in labor

The diminishing returns start when the firm hires the third worker as the MP decreases

option(C)