Essays on Microeconomic Theory Assignment

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The paper "Microeconomic Theory" is a wonderful example of an assignment on macro and microeconomics.   Units of Labour Total Product (boxes per hour) Marginal Product (boxes per extra worker) Average product (boxes per worker) A 0 0 ////////////////// /////////////////// B 1 25 25 25 C 2 60 35 30 D 3 80 20 26.67 E 4 90 10 22.5 F 5 95 5 19 (ii) The marginal product is the extra unit of output that can be produced through the application of a single unit of output (Tian, 2002). For instance, when you increase the input from one to two units, the difference in the levels of output constitutes the marginal product. (iii) The law of diminishing returns states that the volumes of output levels increase steadily with every additional unit of input up to a point where additional units of input lead to a negative increase in marginal output levels.

In the above table, we can observe that when the units of input are increased from 1 worker to 2, the output scales rise from 25 to 60, bringing in a marginal product of 35. From this level, additional units of labor only lead to a decline in marginal output levels from 35 at 2 units to 5 at 5 units of labor. The law shows that it is only economical to increase the value and volume of inputs up to a certain point where further increase starts bringing in losses resulting from diseconomies of scale. (iv) The marginal product shows the output presented by one additional unit of input while average productivity shows the output of every single unit of input in production.

When a company wishes to hire an additional worker, they need to use the concept of marginal product, which will show how much this worker brings to the company in the form of output.

On the other hand, when the company wishes to know how much each worker in the company produces as output, it finds the average of the same. The following diagram offers a relationship between the two. Output Average product Marginal product Input (v) Marginal cost is the cost incurred during the process of bringing in an additional unit of input. When an additional unit of input is done, there is a marginal production. The costs involved in bringing in this marginal production is what is being referred to as the marginal cost.

References

Tian, G. (2002). Microeconomic theory. Retrieved from

http://econweb.tamu.edu/~tian/micro1.pdf

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