ECN 104 Lecture 7: Lecture 7

45 views7 pages

maroonzebra255

13 Feb 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Product ( tp ) : is the service. Ap = quantity of total produced . the extra output unit of variable a particular good or associated input ( i. e. with labor adding. = changeintpchauge input unit labor in is per the output totalproduct units of labor of labor input. As existing factor , marginal product the decreases variable of variable factor firm. Units worker a of hires labor to produce chairs. Product factor of labor each are additional added to unit of. Fixed costs are the costs that do not change when firm changes its ( i. e. output rental interest payment ) Variable costs are the costs that increase or decrease with a firm "s output i. e. cost of goods , utilities. Average fixed cost ( afc ) is the total fixed cost divided by the output. Afc = tfcq output is produced , the lower the average fixed cost.

Related Questions

Use the following information on a hypothetical short-run production function to answer questions A-C.

The price of labor is $20 per day.

Ten units of capital are used each day, regardless of output level.

The price of capital is $50 per unit.

(A). Calculate the marginal product (MP) and average variable product (AP) of each unit of labor input.
(B). Calculate total (TC), average total (ATC), average variable (AVC), and marginal costs (MC).
(C). Can you tell where diminishing marginal returns sets in?

Labor (L)	Output (Q)	MP	AP	TC	ATC	AVC	MC
5	120	--					--
6	140
7	155
8	165
9	168

harlequinotter496

Given the following information for Mary's taco shop (TP, AP, and MP are measured in tacos):

Labor (L)	Total Product (tacos) (TP)	Average Product (tacos) (AP)	Marginal Product (tacos) (MP)
0	0	--	--
1			20
2		25
3			50
4	150
5		36
6	200
7		30
8	210

a) Fill in the blanks above. (Round each answer to the nearest taco)

Please note there are no numbers for MP and AP when output is zero tacos.

b) Define the law of diminishing marginal returns.

c) At which worker (labor) does diminishing returns start? Please explain the reasoning behind your answer.

d) If each taco could be sold for $4 per taco, and each worker is paid $70 per day then, assuming that labor is the only cost of production, how many workers should Mary hire in order to maximize profits? Please explain the reasoning behind your answer.

lilacmacaw694

The table below describes the total product of a firm. Fill in the missing values, a) - u), by calculating marginal product and average product.

1	2	3	4
Units of the variable resource (Capital)	Total Product (TP)	Marginal Product (MP)	Average Product (AP)
Units of the variable resource (Capital)	Total Product (TP)	Marginal Product (MP)	Average Product (AP)	0	0	a	-
1	1	b	l
2	3	c	m
3	6	d	n
4	10	e	o
5	15	f	p
6	18	g	q
7	20	h	r
8	19	i	s
9	17	j	t
10	13	k	u

Refer to the table from above.

a. List the units of capital exhibit increasing marginal returns?

b. List the units of capital exhibit decreasing marginal returns?

c. List the units of capital exhibit negative marginal returns?

8. Describe how the total product and average product curves change as a firm moves from increasing to diminishing to negative marginal returns.

9. Does the law of diminishing returns mean that, as a firm hires additional workers, each of those workers is successively worse at doing their job? Why or why not?

chocolategoose43

ECN 104 Lecture 7: Lecture 7

Document Summary

Get access

Related Documents

ECN 104 Study Guide - Final Guide: Taipei Metro, Average Variable Cost, Monopoly Profit

ECN 104 Lecture Notes - Lecture 3: Variable Cost, W. M. Keck Observatory, Fixed Cost

ECN 104 Study Guide - Midterm Guide: Monopoly Price, Monopolistic Competition, Product Differentiation

Related Questions