Machines (ants) Labour (unis) “Average product (units) [ 1 5 40 1 6 70 1 7 90 1 3 100 [Explain whether the above data illustrate the law of diminishing marginal returns. 18. ‘The input-output relationship of Firm A is es follows: Labour (Units) | Machinery (Units) | A¥°F*8° coun Machinery 4 6 4 7 4 8 4 7 4 5 _ ‘According to the above table, diminishing marginal retums set Unit of machinery is employed. 3rd 4th Sth pomp 10, The following table shows the input-output relationship of. fir, The only inputs required are capital and labour. Capital (units) Labour (mits) | Marginal product of labour (units) 2 1 STITT tila 2 7 i 7 2 3 9 2 i 3 2 3 6 The average product of labour is atthe highest when the quantity of labour is_units. 1, 2 3 4 5 pose ‘The input-output relationship of Firm A is as follows: Labour (Units) | “Machine (Units) | Marginal Product of Labour (Units) 1 2 14 2 2 16 3 2 18 | a 2 x } Diminishing marginal returns set in after the 3rd unit of labour is employed. ‘The average product of 4 units of labour can be A 16 B. 165 co” D. 17s ‘units of output15. 16, ‘The table below shows the production of Good X in a firm. Only two inputs are required in the production process. a Capit Cis | NUMBTCE | Rotts of workers | Total Output per day 2 10 10 5000 2 0 9 4900 2 0 8 4700 2 10 7 400 Due to a fall in market demand, the firm reduces the output by cutting the working hours of the workers from 10 hours a day to 8 hours a day. Based on the above information, we can conclude that the supply of Good X by the firm decreases. the amount of labour employed by the firm remains const the law of diminishing marginal returns applies to the firm. the firm enjoys economies of scale, came The input-output relationship of Firm A is as follows : Capital (unis) —___ Labour ft) ‘Marginal ouput (units 1 I 10 70 T it 7 o T 12 a I 3 7 From the above table, we can conclude that, as the labour input increases ‘A. total output is increasing, B. average outputs increasing, C. firm Ais experiencing diseconomies of scale, D. the average cost of production is decreasing, ‘The input-outpat relationship ofa firm is a8 follows: Labour (nits) | Machine (units) | Average product of sbour (ni) 1 2 4 2 2 1s 2 16 Diminishing marginal returos set in aftr the 3rd unit of labour is employed. ‘The marginal product of ‘he 4th unit of labour must be any number of output smaller than units. As BG co Die ‘A factory employs 2 total of 30 workers. The following table shows the fallin its total output when workers are absent from work in the short run. [Womberof workers | Decrease in absent from work | daily output (units) _| 20 45 % 15 145