Suppose a chair 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 Number of Chairs
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) Does this production function exhibit diminishing returns to labor? Explain.
c) Explain intuitively what might cause the marginal product of labor to become negative.