The following diagram depicts the production function of the farmers, where diminishing average product of labour is assumed. At A the average product of labour is 500,000/800 = 625 kg of grain per farmer. At B the average product of labour is 732,000/1,600 = 458 kg of grain per farmer. If you know that the grain output for 2,800 farmers is 894,000kg, then read the following statements and select the correct two.
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Question

The following diagram depicts the production function of the farmers, where diminishing average product of labour is assumed. At A the average product of labour is 500,000/800 = 625 kg of grain per farmer. At B the average product of labour is 732,000/1,600 = 458 kg of grain per farmer. If you know that the grain output for 2,800 farmers is 894,000kg, then read the following statements and select the correct two.

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Accepted Answer

If the production function curve is an upward-sloping straight line, then there is no diminishing average product of labour.

Answer

For this production function, it is possible that initially there are economies of scale (for example, when there are two farmers instead of one, the average output increases as they efficiently share the workload).

Answer

The slopes of the rays from the origin to the production function decrease along the curve, indicating that the average product of labour is decreasing.

Answer

When the labour input is 2,800, the average product of labour is 300 kg.

Crowdly

The following diagram depicts the production function of the farmers, where dimi...

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