Suppose a furniture manufacturer is producing in the short run (with its existing plant and equipment). The manufacturer has observed the following levels of production corresponding to different numbers of workers:
Number of Workers (L) Pairs of shoes (Q)
1 10
2 18
3 24
4 28
5 30
6 28
7 25
(a) Calculate the marginal and average product of labor for this production function.
(b) Indicate the points that delineate the three stages of production.
(c) Does this production function exhibit diminishing returns to labour? Explain.
(d) Explain intuitively what might cause the marginal product of labour to become negative.