Instructions
Click on the title above and then click on the attachment to see the Unit 4 scenario and instructions. Use the Scenario 4 Excel Worksheet (Student), attached, to complete your assignment.
Note: The PPT files published in this course follow the ADA accessible format.
Attachments
Scenario 4 – Production in the Short Run – Details and Instructions.ppsx(127.97 KB) Scenario_4_-_Excel_Worksheet_(Student).xlsx(12.88 KB)
Sheet1
| L (Labor) | Q (Total Product) | MP (Marginal Product) | AP (Average Product) |
| 0 | 0 | ||
| 1 | 10 | ||
| 2 | 30 | ||
| 3 | 60 | ||
| 4 | 100 | ||
| 5 | 130 | ||
| 6 | 150 | ||
| 7 | 168 | ||
| 8 | 184 | ||
| 9 | 189 | ||
| 10 | 190 | ||
| 11 | 187 | ||
| 12 | 180 | ||
| 1. Explain when increasing returns occurs. | |||
| Explain when diminishing marginal returns occurs. | |||
| Explain when negative marginal returns occurs. | |||
| 2. Why does that occur? Are the last people you hired just lazy? | |||
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Production in the Short Run
Total Product, Marginal Product, and Average Product
Diminishing Marginal Returns
McDonald’s
You have fulfilled your dream by buying a McDonald’s franchise. You start hiring employees and come to realize that the first employees you hired were extremely productive, but every additional person you hired seemed to be less productive.
Why does that occur? Are the last people you hired just lazy?
The capital is fixed in the short run, but you can change your labor in the short run.
You decide to calculate the marginal product and the average product of your business.
Calculate Marginal Product (MP) and Average Product (AP) using the Scenario 4 Excel Worksheet
| L Labor | Q Total Product | MP Marginal Product | AP Average Product |
| 0 | 0 | ||
| 1 | 10 | ||
| 2 | 30 | ||
| 3 | 60 | ||
| 4 | 100 | ||
| 5 | 130 | ||
| 6 | 150 | ||
| 7 | 168 | ||
| 8 | 184 | ||
| 9 | 189 | ||
| 10 | 190 | ||
| 11 | 187 | ||
| 12 | 180 |
1. Create a Line chart, in the Scenario 4 Excel Worksheet, of a Total Product curve.
Directions to create a Line chart, in the Scenario 4 Excel Worksheet, of a Total Product curve.
Step 1: Highlight the Labor and Total Product columns.
Step 2: Under Insert, click Recommended Charts and select Line.
Step 3: Click on the title “Q (Total Product)” and change it to “Total Product”
Step 4: Click on Chart Design, then Add Chart Element, and then Axis Titles – Primary Vertical. Vertical axis should be titled “Output”
Step 5: Click on Add Chart Element and then Axis Titles – Primary Horizontal. Horizontal axis should be titled “Labor”
2. Create a Line chart, in the Scenario 4 Excel Worksheet, of the Marginal Product and Average Product curves.
Directions to create a Line chart, in the Scenario 4 Excel Worksheet, of the Marginal Product and Average Product curves.
Step 1: Highlight the Marginal Product and Average Product columns.
Step 2: Under Insert, Click Recommended Charts and select Line.
Step 3: Under Chart Design, click Select Data, and then in the Horizontal (Category axis labels: enter the following: =Sheet1!$A$2:$A$14
Step 4: Click on the Chart Title and change it to “Average and Marginal Product Curves”
Step 5: Click on Chart Design, then Add Chart Element, and then Axis Titles – Primary Vertical. Vertical axis should be titled “Average and Marginal Product”
Step 6: Click on Add Chart Element and then Axis Titles – Primary Horizontal. Horizontal axis should be titled “Labor”
Answer the following questions on the Scenario 4 Excel Worksheet
1. Explain when increasing marginal returns occurs. Explain when diminishing marginal returns occurs. Explain when negative marginal returns occurs.
2. Answer the original questions you asked yourself, “You start hiring employees and come to realize that the first employees you hired were extremely productive, but every additional person you hired seemed to be less productive. Why does that occur? Are the last people you hired just lazy?”
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