Name:
Assignment-Short-Run Production Function for Tony’s Hat Store
Quantity of Input Total Product Marginal Product Average Product
(workers hired) (Total hats produced) (additional hats (hats per worker)
from each worker)
0 0
1 10
2 25
3 45
4 60
5 70
6 75
7 70
Graph TP, MP*, AP, and identify regions of increasing, decreasing, and marginal returns
75
70
65
60
55
Number of Hats
50
45
40
35
30
25
20
15
10
0 1 2 3 4 5 6 7
Number of Workers
*Graph MP between workers
Name:
Definitions:
Total Product (TP)=
Marginal Product (MP)=
Average Product (AP)=
The Law of Diminishing Marginal Returns-
Stage I: Increasing marginal returns
Stage II: Decreasing marginal returns
Stage III: Negative marginal returns
Questions:
1. How many hats can three workers make?
2. How many additional hats are made as a result of hiring the 5th worker?
3. On average, how many hats can 2 workers make?
4. At what point does marginal product diminish?
5. Does total product decrease when marginal product falls?
6. When marginal product is zero, what happens to total product?
7. The hiring of which worker leads to 20 additional hats being produced?
8. How many workers does it take to make 60 hats?
9. What is the result of hiring the 7th worker? Why?
10. What causes increasing marginal returns?
11. How does MP affect AP? How is this demonstrated by the curve?
