Question

Tendai is a welder who started his own business making security gates, fences and other related steel product .

Unit of capital employed

Unit of Capital employed	Output quantity (Q)
10	340	560	800	1 000	1 160	1 380	1 650	1 950	1 980	2 200
9	400	620	840	1 030	1 210	1 440	1 770	2 000	2 050	2 100
8	380	540	810	980	1 090	1 400	1 700	1 980	2 010	2 050
7	350	510	730	910	1 070	1 340	1 540	1 740	1 780	1 800
6	200	390	590	880	1 050	1 200	1 430	1 560	1 600	1 650
5	120	280	550	810	1 000	1 160	1 300	1 400	1 450	1 440
4	90	260	510	640	730	930	1 050	1 250	1 380	1 350
3	70	220	400	510	600	780	830	980	1 020	1 010
2	50	180	300	410	480	540	590	630	670	660
1	40	100	160	220	290	370	430	480	510	500
	1	2	3	4	5	6	7	8	9	10
	Unit of labour employed

Short-run changes in production showing factor productivity

4.1 Use the output associated with five (5) units of capital ( shaded row in table) and prepare a table of information that clearly indicates the ranges of labour input that define Stage I, II and III of production ( 20)

4.2 Explain to Tendai what stage of production is most efficient and how many units of labour he should employ to optimise production when investing five (5) unit of capital. Labour units cannot be divided into parts of a unit (4)

4.2 At what point in the table do diminishing returns begin to take effect? Explain (4)

Answer 1

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