A firm has the following output and labor combinations, given 20 units of capital:
L 10 11 12 13 14
Q 48 55 61 65 67
a) Calculate the average product of labor and the marginal product of labor when L=11, 12, 13, and 14.
b) Suppose that capital costs $30 per unit (r = $30). What is the average fixed cost for each level of output?
c) Suppose that labor costs $40 per unit (w = $40). What is the average variable cost for each level of output?
d) Calculate the marginal cost for Q at levels of 55, 61, 65, and 67.
A firm has the following output and labor combinations, given 20 units of capital:
L 10 11 12 13 14
Q 48 55 61 65 67
a) Calculate the average product of labor and the marginal product of labor when L=11, 12, 13, and 14.
b) Suppose that capital costs $30 per unit (r = $30). What is the average fixed cost for each level of output?
c) Suppose that labor costs $40 per unit (w = $40). What is the average variable cost for each level of output?
d) Calculate the marginal cost for Q at levels of 55, 61, 65, and 67.
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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 | -- | Ā | Ā | Ā | Ā | -- |
| 6 | 140 | Ā | Ā | Ā | Ā | Ā | Ā |
| 7 | 155 | Ā | Ā | Ā | Ā | Ā | Ā |
| 8 | 165 | Ā | Ā | Ā | Ā | Ā | Ā |
| 9 | 168 | Ā | Ā | Ā | Ā | Ā | Ā |
Ā
|
Units of labor |
Units of Output |
Average Product |
Marginal Product |
Fixed Cost |
Variable Cost |
Total Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
Profit |
Producer Surplus |
|
1 |
5 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
2 |
15 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
3 |
30 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
4 |
50 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
5 |
65 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
6 |
77 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
7 |
86 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
8 |
94 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
9 |
98 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
|
10 |
96 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
The firm has fixed costs of $50, labor costs the firm $10 per unit, and the firm faces a market-determined price of $2.00 per unit of output. Complete the above table.
