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Wk3 Assignment 1

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Assignment 1

Explain why the firm’s short run production has only one ‘rational’ stage of production. That is because of a few reason one the firm is only on stage 1 of the 3 stages of productions which is 1st stage is when the company will increase in products so the company will have to add new workers to keep up with the products. Stage 2nd is where all the companies should be at and stay there it is the perfect stage and the companies are making money and such. Now stage 3rd is where the companies are declining and this stage the companies start losing money and have to laying off the workers it’s kind of like to many chief and not a lot of Indians. Now the chart below shows that the firm is doing good one way to tell if the firm isn’t is when the charts are going into an x or cross diagram that would be stage 3. Finally with knowing the charts below is showing in a positive way then we know that the firm is in stage one and that is way the firm has only 1 short run production ‘rational’ stage of production. Below is the information on the rest of this answer. Amount of labour = L
(units or workers) | Amount of capital = K (No. of machines) | Output of parts = Q
(Q, hundreds of parts) | Average product = AP (Q/L) | Marginal product = MP (∆Q/∆L) | 0 | 5 | 0 | - | - | 1 | 5 | 49 | 49 | 49 | 2 | 5 | 132 | 66 | 83 | 3 | 5 | 243 | 81 | 81 | 4 | 5 | 376 | 94 | 133 | 5 | 5 | 525 | 105 | 149 | 6 | 5 | 684 | 114 | 159 | 6.66 | 5 | 792.59 | 120.09 | 119.007508 | 7 | 5 | 847 | 121 | 163 | 8 | 5 | 1008 | 126 | 161 | 9 | 5 | 1161 | 129 | 129 | 10 | 5 | 1300 | 130 | 139 | 11 | 5 | 1419 | 129 | 119 | 12 | 5 | 1512 | 126 | 93 | 13 | 5 | 1573 | 121 | 121 | 14 | 5 | 1596 | 114 | 23 | 14 | 5 | 1575 | 105 | 112.5 |

References

Farnham, P. G. (2010). Economics for managers (2nd ed.). Upper Saddle River, NJ: Pearson Education Inc., Published as Prentice Hall.

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