Analysis of Production Schedule and Returns to Labour
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I. Table 1 below shows the production schedule of a firm producing maize. Use the information in it to answer the questions that follow. TABLE 1 | LAND (acres) | LABOUR | TOTAL PRODUCT (bags) | AVERAGE PRODUCT (bags) | MARGINAL PRODUCT (bags) | |---|---|---|---|---| | 2 | 0 | - | - | - | | 2 | 1 | 15 | 15 | 15 | | 2 | 2 | 32.4 | 16.2 | 17.4 | | 2 | 3 | 51 | 17.0 | 18.6 | | 2 | 4 | P | 18.4 | 22.6 | | 2 | 5 | 86.5 | 17.3 | 12.9 | | 2 | 6 | 96 | 16.0 | 9.5 | | 2 | 7 | 103.8 | 14.8 | R | | 2 | 8 | 108 | 13.5 | 4.2 | | 2 | 9 | 97.6 | Q | -10.4 | | 2 | 10 | 94.6 | 9.46 | -3.0 | (a) Compute the values P, Q and R. [9 marks] (b) At which unit(s) of labour does the firm experience: (i) increasing returns; (ii) negative returns? Explain your answer in each case. [2 marks] [2 marks] (c) Describe the relationship between the average product and marginal product of the firm. [7 marks]
This question includes visual content: A table titled 'TABLE 1' displaying the production schedule of a maize-producing firm. It has five columns: LAND (acres), LABOUR, TOTAL PRODUCT (bags), AVERAGE PRODUCT (bags), and MARGINAL PRODUCT (bags). The table shows data for labour units ranging from 0 to 10. The Land column is constant at 2. There are missing values labeled P, Q, and R in the Total Product, Average Product, and Marginal Product columns, respectively. The data shows how total, average, and marginal products change as labour increases.
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Hi beliyin, let's analyze this production schedule for a firm producing maize. We need to fill in missing values and identify the stages of production.
Production Analysis
First, let's recall the fundamental formulas we will use. Total Product is Average Product times the units of Labour. Average Product is Total Product divided by Labour. And Marginal Product is the change in Total Product divided by the change in Labour.
Now, let's solve for P in part A. At 4 units of labour, the Average Product is 18.4. Multiplying these gives us a Total Product of 73.6.
Part (a): Computing P, Q, and R
We can verify this using the Marginal Product for that row, which is 22.6. Adding this to the previous Total Product of 51 also gives us 73.6.
Next, let's find Q. At 9 units of labour, the Total Product is 97.6. Dividing this by 9 gives an Average Product of approximately 10.84.
Finally, let's calculate R, which is the Marginal Product at 8 units of labour. We take the current Total Product of 108 and subtract the previous one of 103.8.
For part B, we need to identify the units of labour for specific returns. Increasing returns occur when the Marginal Product is rising. Looking at our table, this happens from labour unit 1 to 4.
Part (b): Returns to Labour
(i) Increasing Returns: Units 1 to 4
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