Question

Below is a table showing the production numbers for a chair factory (where the production numbers...

Below is a table showing the production numbers for a chair factory (where the production numbers are based on chairs being produced per day).

 Workers Total Product (TP) Average Product (AP) Marginal Product (MP) Value of the Marginal Product (VMP) 0 0 - - - 1 10 2 15 3 40 4 35 5 190 6 30 7 240 8 250 9 5

a) Fill in the missing numbers for the TP, AP and MP columns (round to the nearest chair)

b) In one sentence explain what the AP of 4 workers being 35 tells us.

c) In one sentence explain what your answer for MP of the 4th worker tells us.

d) Given the fact that each chair produced in our factory can be sold at the market price of \$15 per chair, fill in the VMP column (round to the nearest dollar).

e) In one sentence explain what your answer for VMP for the 4th worker tells us.

f) If the market wage for workers doing manufacturing work (such as chair production) is \$200 per day, determine the amount of workers this firm should hire to maximize its profit.

Ans:

a) Table showing Total product,Average product and Marginal product.

 Workers Total Product(TP) Average Product(AP) Marginal Product(MP) 0 0 0 0 1 10 10 10 2 30 15 20 3 70 23.33 40 4 140 35 70 5 190 38 50 6 220 36.67 30 7 240 34.28 20 8 250 31.25 10 9 255 28.33 5

b) when 4 workers are employed , we can produce a average output of 35 units.

c) if 4th worker is employed an additional output of 70 units can be produced.

d) Table showing Total product,Average product,Marginal product and Value of the marginal product.

 Workers Total Product(TP) Average Product(AP) Marginal Product(MP) Value of the marginal product(VMP) 0 0 0 0 0 1 10 10 10 150 2 30 15 20 300 3 70 23.33 40 600 4 140 35 70 1050 5 190 38 50 750 6 220 36.67 30 450 7 240 34.28 20 300 8 250 31.25 10 150 9 255 28.33 5 75