Each unit of input, X, costs $10. Fixed costs are $50, regardless of the level of output.
a.Complete the table below.
Labor, X
Total
Output (TPP)
Marginal
Physical
Product (MPP)
TFC
TVC
TC
AFC
AVC
ATC
MC/unit
0
0
1
15
2
45
3
70
4
90
5
105
6
110
7
112
b.If the product can be sold for $0.75 per unit, what is the optimal level of output?
C. Find the level of profit at the optimal level of output. Explain what would happen if the firm produced one more unit of output in terms of marginal cost and marginal revenue.
Each unit of input, X, costs $10. Fixed costs are $50, regardless of the level of output.
a.Complete the table below.
| Labor, X | Total Output (TPP) | Marginal Physical Product (MPP) | TFC | TVC | TC | AFC | AVC | ATC | MC/unit |
| 0 | 0 | ||||||||
| 1 | 15 | ||||||||
| 2 | 45 | ||||||||
| 3 | 70 | ||||||||
| 4 | 90 | ||||||||
| 5 | 105 | ||||||||
| 6 | 110 | ||||||||
| 7 | 112 |
b.If the product can be sold for $0.75 per unit, what is the optimal level of output?
C. Find the level of profit at the optimal level of output. Explain what would happen if the firm produced one more unit of output in terms of marginal cost and marginal revenue.
Related textbook solutions
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 |
