1.Complete the table (Table 1) below

Table showing the Average and Marginal product of labor for a hypothetical firm
|Amount of labour( |Amount of |Output of parts(Q, |Average product |Marginal product(∆Q/∆L) |
|units) |capital(No. of |hundreds of parts) |(Q/L) | |
| |machines) | | | |
| 0 |5 |0 |- |- |
| 1 |5 |49 |49 |49 |
| 2 |5 |132 |66 |83 |
| 3 |5 |243 |81 |111 |
| 4 |5 |376 |94 |133 |
| 5 |5 |525 |105 |149 |
| 6 |5 |684 |114 |159 |
| 6.666 |5 |792.59 |120.09 |163.04 |
| 7 |5 |847 |121 |163 |
| 8 |5 |1008 |126 |161 |
|9 |5 |1161 |129 |153 |
|10 |5 |1300 |130 |139 |
|11 |5 |1419 |129 |119 |
|12 |5 |1512 |126 |93 |
|13 |5 |1573 |121 |61 |
|14 |5 |1596 |114 |23 |
|15 |5 |1575 |105 |(21) |

Short-Run Average product (AP) and Short-Run marginal product (MP) curves

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Use the information from the completed table and the graphs to identify the three stages of production

Three stages of production are:

Stage 1: 0 to 10

Begins at the start of the production where L = 0, and runs to the point where average product of labor is at maximum. In this stage the there is too much capital relative to labor.

Stage 2: 11 to 14

Begins at the point where the average product of labor is at maximum. In this stage there is neither a redundancy of capital or labor

Stage 3: 15 and above

The marginal product of labor becomes negative. There is too much labor relative to capital

Explain why the firm’s short run production has only one ‘rational’ stage of production

There is only one rational stage of production because the marginal product and the average product only intersect at one point.