Using the table below, calculate the marginal and average products. Given that the values of A and B in the table above are the corresponding values such that B is the first two digit of your personalized matriculation number and A is the last two non-zero digit. (b) Define Income elasticity of demand showing the formula. (c) In the face of the recent economic recession in Nigeria, there is need for a plan B: The 'No CHICKEN' THEORY. Discuss the concept, stating 5 'Chickens' to be avoided by a student in this situation.

Completed Production Table (units of labor and packs of milk)

Step 1: Marginal Product (MP) calculations
Formula: $\text{MP}_L = TP_L - TP_{L-1}$ (packs of milk per unit labor)

L=1: $\text{MP}_1 = 10 - 0 = 10$ packs per labor
L=2: $\text{MP}_2 = 17 - 10 = 7$ packs per labor
L=3: $\text{MP}_3 = 23 - 17 = 6$ packs per labor
L=4: $\text{MP}_4 = 28 - 23 = 5$ packs per labor
L=5: $\text{MP}_5 = 32 - 28 = 4$ packs per labor

Step 2: Average Product (AP) calculations
Formula: $\text{AP}_L = \frac{TP_L}{L}$ (packs of milk per unit labor)

L=1: $\text{AP}_1 = \frac{10}{1} = 10$ packs per labor
L=2: $\text{AP}_2 = \frac{17}{2} = 8.5$ packs per labor
L=3: $\text{AP}_3 = \frac{23}{3} \approx 7.67$ packs per labor
L=4: $\text{AP}_4 = \frac{28}{4} = 7$ packs per labor
L=5: $\text{AP}_5 = \frac{32}{5} = 6.4$ packs per labor

[a] Using this situation, why Chola cannot fetch cash K1000s of packing milk
Chola faces diminishing marginal returns: MP falls from 10 to 4 packs per additional labor. The firm hires labor until Marginal Revenue Product (MRP = price $\times$ MP) equals wage. Beyond L=3 or 4, low MP means MRP < wage, so no more hiring. Maximum TP=32 packs limits total revenue (cash), cannot reach K1000s without higher price or more efficient labor.

[b] Distinguish between income elasticity for normal and inferior goods
Income elasticity of demand: $\eta_I = \frac{\% \Delta Q_d}{\% \Delta I}$

• Normal goods: $\eta_I > 0$ (luxury: $>1$; necessity: $0 < \eta_I < 1$) – demand rises as income rises.
• Inferior goods: $\eta_I < 0$ – demand falls as income rises (e.g., cheap staples).
  Law of demand holds for price, but income effect differs.

[c] What influences consumption (quantity demanded) of goods
Factors (ceteris paribus):

1. Price of good: $\downarrow P \implies \uparrow Q_d$ (law of demand).
2. Income ($I$).
3. Prices of related goods (substitutes/complements).
4. Tastes/preferences.
5. Expectations.
6. Number of buyers/population.

[d] Explain the nature of the relationship between price and quantity supplied
Upward-sloping supply curve: higher price $\implies$ higher quantity supplied.
Reason: Higher P raises MRP, firms supply more (move along MC curve).
Positive relationship: $\frac{\Delta Q_s}{\Delta P} > 0$.

[e] Define price elasticity of demand (using lecture notes)
Price elasticity of demand ($E_d$):
$E_d = \frac{\% \Delta Q_d}{\% \Delta P} = \frac{\Delta Q_d / Q_d}{\Delta P / P}$
Measures responsiveness of quantity demanded to price change.
Elastic ($|E_d| > 1$), inelastic ($|E_d| < 1$), unit ($|E_d|=1$).

[f] Short note on cross elasticity of demand
Cross price elasticity ($E_{xy}$):
$E_{xy} = \frac{\% \Delta Q_{d_x}}{\% \Delta P_y}$

• Substitutes: $E_{xy} > 0$ ($\uparrow P_y \implies \uparrow Q_{d_x}$).
• Complements: $E_{xy} < 0$.
• Unrelated: $E_{xy} = 0$.
  Used to classify related goods.

See completed table and steps above