Question

The first second, and third workers employed by a firm add 25, 18, and 10 units to total product, respectively. On the basis of this information, we can say that: the total product of the three workers is 9 the average product of the three workers is 3 the law of diminishing marginal returns is not evident in this example the marginal product of the third worker is 8 the law of diminishing marginal returns starts with the addition of the third worker

Answer 1

In this particular instance, the individual contributions of the three workers to the total product are 25.18, and 10 respectively. Therefore, the total product of the three workers=(25+18+10)=53 and the average product of three workers=53/3=17.66 approximately. Now, as the additional contribution of each worker to the total product evidently decreses from 25 to 18 to 10, the law of diminishing marginal returns is actually applicable, in this case and the marginal product or the additional contribution of the third worker in the total product is 10 based on the information provided in the question. However, the law of diminishing marginal marginal returns does apply as the third worker is employed as the total product increases by 10 units as compared to 18 units when the second workers was hired. Hence, the answer, in this case would be the last or the 5th option given in the answer choices or options or the law of diminishing returns starts with the addition of the third worker.

The marginal cost of production can be defined as the change in total cost of production which includes both the total fixed and variables costs as the output or production increases by one unit or each additional unit. Marginal cost basically includes the incremental change in the total cost of production and not the average fixed, variable, or total cost of production. Therefore, the answer here would be the second option given in the answer choices or options or change in total cost that results from producing one more unit of output.

The law of diminishing marginal returns can be evidently described or identified a point in the production or business operation at which hiring or employing a particular factor or input of production keeping the other factors/inputs of production constant, would yield increasingly lower units of output or final production. It essentially implies that the additional level of total output would increasingly fall as any factor or input of production is successively used in the production process, keeping the ther factors/inputs or resources fixed. Minimization of the average cost of production in the production process is asociated with the microeconomic concept of economies of scale.The law of diminishing marginal returns is associated with the relationship between the individual factors or inputs of production and the change in the overal or total output level and it is not related to the relationship between the respective productive resources or factors/inputs of production and the law of diminishing marginal returns is only applicable in the short-run phase of the production process when only factor or input of production is variable and the others arefixed. Hence, the answer, in this casw would be the second option given in the answer choices or options or as the successive amounts of labor are added to fixed amounts of other resources, beyond some point the resulting additional output will fall.

In this case, note the points h and k in the graph given indicate the minimum points of the average variable cost and the average total cost respectively as the marginal cost curve intercept them at point h and k respectively. The market price of the output is lablelled or indicated by point e which intercepts the marginal cost curve at point c and the market price of the output is still gteater than the average variable cost at all levels of output as depicted by the given diagram and hence, the firm will not shut-down or go out of business, in this case. It will maximize profit at point c by producing output level at point n where the marginal cost of production is equal to the market price of output implying that the marginal profit earned by the firm is zero and the total profit is maximized. Therefore, the answer here would be the 4th option given in the answer choices or options or n.