A restaurant owner has the following short-run production function:
Q=30L + 2L² where Q=number of meals served per day, and L=number of workers.
a. Draw a table showing total, marginal and average product up to an input of ten workers, and plot these on a graph.
b. Show the range of labour where stages I, II and III of production occur.
c. If workers can be hired for $40 per day and the average meal is $6, how many workers should be hired?
A restaurant owner has the following short-run production function:
Q=30L + 2L² where Q=number of meals served per day, and L=number of workers.
a. Draw a table showing total, marginal and average product up to an input of ten workers, and plot these on a graph.
b. Show the range of labour where stages I, II and III of production occur.
c. If workers can be hired for $40 per day and the average meal is $6, how many workers should be hired?
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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 | -- | -- | ||||
| 6 | 140 | ||||||
| 7 | 155 | ||||||
| 8 | 165 | ||||||
| 9 | 168 |
