Temple University

Economics 52

Production Theory

Name

Based on data obtained by the U.S. Department of Agriculture, the relationship between a cow's total output of milk and the amount of grain it is fed is as follows:

Number of pounds of grain

Milk Production

Marginal Product

Average Product

2

75

--

3

30

4

20

5

130

6

5

7

19.5

 

a. Fill in the blanks in the table.

b. Does this production function exhibit diminishing marginal returns to the variable input? Yes  or No

c. Suppose that the farmer is able to sell raw milk for $.50 per gallon. He pays $2.50 per pound of feed. How much feed will he buy for each cow?