ECO100Y5 Lecture Notes - Lecture 6: W. M. Keck Observatory
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. The following table summarizes the short-run relationship between a firm's total labor input and its total output. (9 points)
Labor Input | Total Product | Marginal Product | Average Product |
0 | 0 | ||
1 | 20 | ||
2 | 46 | ||
3 | 75 | ||
4 | 102 | ||
5 | 125 | ||
6 | 138 | ||
7 | 140 | ||
8 | 136 |
a. Fill in the columns labeled "Marginal Product" and "Average Product."
b. Over what range of labor input does the firm experience increasing marginal returns? Diminishing marginal returns? Negative marginal returns?
c. Comparing marginal product to average product, under what circumstances will average product rise? Under what circumstances will average product fall?
To make sure that you understand the relationships between all of the cost concepts, fill in the missing values in the table below.
Output |
Total Fixed Costs |
Total Variable Costs |
Total Cost |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
0 |
Ā | Ā |
980 |
--- |
--- |
--- |
--- |
1 |
Ā |
400 |
Ā | Ā | Ā | Ā |
400 |
2 |
Ā | Ā | Ā | Ā | Ā | Ā |
450 |
3 |
Ā | Ā |
2,330 |
Ā | Ā | Ā | Ā |
4 |
Ā | Ā | Ā | Ā |
475 |
Ā | Ā |
5 |
Ā | Ā | Ā | Ā | Ā |
696 |
Ā |
6 |
Ā | Ā |
4,180 |
Ā | Ā | Ā |
700 |
7 |
Ā |
4,100 |
Ā | Ā | Ā | Ā | Ā |
8 |
Ā | Ā | Ā | Ā | Ā |
797.5 |
Ā |
9 |
Ā |
7,300 |
Ā | Ā | Ā | Ā | Ā |
10 |
Ā | Ā | Ā | Ā |
980 |
Ā | Ā |
2. Jeremy
Paulina sells beef in a competitive market where the price is $5 per pound. Her total revenue and total costs are given in the table below.
Quantity of beef (lbs.) |
Total revenue ($) |
Total cost ($) |
Profit ($) |
Marginal revenue ($) |
Marginal cost ($) |
Marginal profit ($) |
0 | 0 | 4 | Ā | Ā | Ā | Ā |
1 | 5 | 6 | Ā | Ā | Ā | Ā |
2 | 10 | 9 | Ā | Ā | Ā | Ā |
3 | 15 | 14 | Ā | Ā | Ā | Ā |
4 | 20 | 22 | Ā | Ā | Ā | Ā |
Instructions: Round your answers to the nearest dollar and include a negative sign if appropriate.
a. Fill out the table.
b. At what quantity does marginal revenue equal marginal cost?
_____________pounds.