Question

EXERCISE

1)      What is the difference between the short run and the long run for the profit-maximizing firm?

2)      The number of repairs produced by a computer retail shop depends on the number of workers as follows:

Number of Workers	Number of Repair	Marginal Product (what each additional worker adds to the total production)	Average Product (the number of units per worker)
0	0	-
1	8
2	20
3	35
4	45
5	52
6	57
7	60

3. For what range of labor input are there increasing returns to labor (where each additional worker adds more to production than the previous one)?

4. For what range of labor input is marginal product greater than average product? What is happening to average product as employment increases over this range?

5. For what range of labor input is marginal product smaller than average product? What is happening to average product as employment increases over this range?

Answer 1