Solved Microeconomic Exercises: Theory of Production

Topic 6 : Theory of production
Problems
Task A : A company has an assembly line of fixed size A. Total output is a
function of the number of workers as shown in the following schedule.
MP AP A1 Determine schedules
- - for marginal productivity
of labor and average
10 10 productivity of labor:
20 15
∆Q
20 16.(6) MP=
∆L
6 14
3 11.8
Q
1 10 AP=
L
0 8.57
-2 7.25



A2 Determine the rage of employment that show the three stages of
production

25



20



15



10



5



0
0 1 2 3 4 5 6 7 8 9


-5


Stage 1 of labor : Is the range of production for which increases in the use of a
variable input cause increases in its average product – Labor (1-3)
Stage 2 of labor: Is the range for which increases in the use of a variable input
causes decreases in its average product, while values of its associated marginal
product remain nonnegative – Labor (3-7)
Stage 3 of labor: Is the range for which the use of a variable input corresponds to
negative values for its marginal product – Labor (7-8)