Graber and Johnson,Attorney's at Law,recently Opened a Law Practice in the Northwest.Their

question 144

Essay

Graber and Johnson,Attorney's at Law,recently opened a law practice in the Northwest.Their goal is to generate a monthly net income of $10,000.They have initially set their billing rate at $150 per hour.Their billable hours in the first month of operations (January)were 150 and in the second month of operations (February),175 billable hours.The costs incurred at these levels for January and February are given below.

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Definitions:

Marginal Product

The extra production achievable by incorporating an additional unit of a particular input, assuming all other variables remain constant.

Average Product

The output per unit of input, calculated by dividing total output by total input.

Diminishing Marginal Returns

Diminishing Marginal Returns is an economic principle stating that as additional units of a factor of production are added to a fixed amount of other factors, the incremental increase in output will eventually decrease.

Marginal Product

The additional output that results from using one more unit of a specific input, keeping other inputs constant.