3. (10 marks) This question has five parts, each worth 2 marks each.

Consider the following production data of a firm producing pens in a perfectly

competitive market:
Labour 0 1 1.5 1.75 4 7
Output 0 1 2 3 4 5
a. Find the marginal product at each level of labour input.

b. Identify the levels of labour input corresponding to increasing marginal productivity

and diminishing marginal productivity.

c. Assume the cost of labour is Rs. 100 per unit and the fixed cost is Rs. 50. Find the total
and marginal cost at each level of output.

d. Assume the market price is Rs. 200. What is the profit maximizing output level(only
integer amounts relevant)?

e. What is the property that the supply curve of a profit maximizing firm in perfect
competition must satisfy (Hint: do not forget about the shutdown point!)?