Problem
It is dawn in Shanghai, China. Already thousands of Chinese are out cleaning the city's streets. They are using brooms.?On the other side of the world, night falls in Washington, D.C., where the streets are also being cleaned-by a handful of giant street-sweeping machines driven by a handful of workers.?The difference in method is not the result of a greater knowledge of modern technology in the United States-the Chinese know perfectly well how to build street-sweeping machines. It is a production decision based on costs in the two countries. In China, where wages are relatively low, an army of workers armed with brooms is the least expensive way to produce clean streets. In Washington, where labor costs are high, it makes sense to use more machinery and less labor.
a. Keeping the production aspect in mind, explain the relationship between Total Product (TP), Average Product (AP) and Marginal Product (MP) with the help of diagram??
b. Also, describe graphically how a firm can reduce its costs in the short run and at what point the firm should stop hiring more cleaners.?