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    Micro Economics Assignment No 03

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    Nabeel
    This document contains the answers to two questions on a microeconomics assignment. [1] For question one, the student calculates average and marginal productivity from a production table using the formulas, and shows the calculations. [2] For question two, the student defines marginal product as the additional output from one more unit of labor, and explains how diminishing marginal productivity occurs. [3] The student also gives an example of an opportunity cost that an accountant would not count as an explicit cost.

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    Micro Economics Assignment No 03

    Uploaded by

    Nabeel
    18 views4 pages
    This document contains the answers to two questions on a microeconomics assignment. [1] For question one, the student calculates average and marginal productivity from a production table using the formulas, and shows the calculations. [2] For question two, the student defines marginal product as the additional output from one more unit of labor, and explains how diminishing marginal productivity occurs. [3] The student also gives an example of an opportunity cost that an accountant would not count as an explicit cost.

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    Micro_Economics_Assignment_no_03

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    This document contains the answers to two questions on a microeconomics assignment. [1] For question one, the student calculates average and marginal productivity from a production table using the formulas, and shows the calculations. [2] For question two, the student defines marginal product as the additional output from one more unit of labor, and explains how diminishing marginal productivity occurs. [3] The student also gives an example of an opportunity cost that an accountant would not count as an explicit cost.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views4 pages

    Micro Economics Assignment No 03

    Uploaded by

    Nabeel
    This document contains the answers to two questions on a microeconomics assignment. [1] For question one, the student calculates average and marginal productivity from a production table using the formulas, and shows the calculations. [2] For question two, the student defines marginal product as the additional output from one more unit of labor, and explains how diminishing marginal productivity occurs. [3] The student also gives an example of an opportunity cost that an accountant would not count as an explicit cost.

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    © All Rights Reserved
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    of 4

    ASSIGNMENT # 03

    Class: BBA 1-B

    Name: NABEEL NAFEES

    Enrollment: (02-111231-129)

    Subject: Micro Economics

    Submitted to: SIR IJLAL MANOOR

    Topic: Average and Marginal Productivity,


    Marginal Product and Opportunity cost.
    QUESTION NO 01:

    ANSWER: To find the Average Productivity and Marginal Productivity of labor from the given
    Production Table, we can use the formulas given:

    AVERAGE PRODUCTIVITY: Total Productivity / Labor


    MARGINAL PRODUCTIVITY: Change in Total Productivity / Change in Labor.

    PART A) AVERAGE PRODUCTIVITY: To calculate the average productivity, we divide the total
    productivity by the amount of labor used.

    For each row, calculate the average productivity using the formula:

    Average Productivity = Total Productivity / Labor

    AVERAGE PRODUCTIVITY:

    0/0 = 0

    2/1 = 2

    5/2 = 2.5

    9/3 = 3

    12/4 = 3

    14/5 = 2.8

    15/6 = 2.5

    15/7 = 2.14

    14/8 = 1.75

    12/9 = 1.33
    PART B) MARGINAL PRODUCTIVITY: To calculate the marginal productivity, we determine
    the change in total productivity and the change in labor between each row.

    For each row, calculate the marginal productivity using the formula:

    Marginal Productivity = Change in Total Productivity / Change in Labor

    MARGINAL PRODUCTIVITY:

    (2-0) / (1-0) = 2/1 = 2

    (5-2) / (2-1) = 3/1 = 3

    (9-5) / (3-2) = 4/1 = 4

    (12-9) / (4-3) = 3/1 = 3

    (14-12) / (5-4) = 2/1 = 2

    (15-14) / (6-5) = 1/1 = 1

    (15-15) / (7-6) = 0/1 = 0

    (14-15) / (8-7) = -1/1 = -1

    (12-14) / (9-8) = -2/1 = -2

    QUESTION NO 02:

    ANSWER:

    PART A. MARGINAL PRODUCT: Marginal product refers to the additional output


    produced when one additional unit of input, in this case, labor, is added while keeping other
    inputs constant. If marginal product is diminishing, it means that the additional output gained
    from each additional unit of labor is decreasing. In other words, as more units of labor are
    employed, the increase in total output becomes smaller. This occurs when the other inputs,
    such as land in this case, are fixed or limited. Diminishing marginal productivity is a common
    phenomenon in production and is a result of factors like specialization, limited resources, or
    the law of diminishing returns.

    PART B. An example of an opportunity cost that an accountant would not count as a cost is
    the cost of using existing equipment or machinery that the firm already owns. The accountant
    might ignore this cost because it does not involve any cash outflow or explicit expenditure
    from the firm. Instead, the accountant focuses on explicit costs, which are actual monetary
    expenses incurred by the business, to calculate profitability and financial performance. The
    opportunity cost of using owned equipment is typically excluded from the cost analysis as it
    does not involve a direct monetary transaction. Accountants typically focus on explicit costs,
    which involve actual monetary expenditures, to measure the financial performance and
    profitability of a business.

    X -----------------------------------------------------------X----------------------------------------------------------- X

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