What is relationship between MP and AP? Explain why MP first rises, then declines and ultimately becomes negative? (c) Whether the above phenomenon is long run or short run and why? (d) Does law of diminishing marginal returns holds in above scenario? Why and why not.

What is relationship between MP and AP? Explain why MP first rises, then declines and ultimately becomes negative? (c) Whether the above phenomenon is long run or short run and why? (d) Does law of diminishing marginal returns holds in above scenario? Why and why not.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter3: Economic Decision Makers

Section: Chapter Questions

Problem 1.1P

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Question

(a) Complete the following table and draw the corresponding graphs.

Capital inputs	Labor inputs	Total product	Average product	Marginal product
20	0	0
20	1	15
20	2	34
20	3	51
20	4	65
20	5	74
20	6	80
20	7	80
20	8	75

(b) What is relationship between MP and AP? Explain why MP first rises, then declines and ultimately becomes negative?

(d) Does law of diminishing marginal returns holds in above scenario? Why and why not.

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