ECON 103 Chapter 8: cost_curves
16 Mar 2016
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The best way for you to understand the shapes of the cost curves in topic 7 is by working through numerical examples. Work through the one provided below as background to lecture material. During lecture i will assume that you have worked through this example. Consider a perfectly competitive rm that produce fast food meals. Before the rm can produce and sell any meals, it must rent a restaurant and equipment etc. Suppose that it rents a restaurant, which costs ,500 per month. That is, the rm"s xed costs are ,500 per month. Once the rm has rented the restaurant, it must decide how many worker hours to devote to operations. The table below shows the total number of meals it can produce given different amounts of labour employed. 3,000: fill in the relevant values for the marginal product of labour (mpl) and average product of labour (apl).
