Use the following information on a hypothetical short-run production function to answer questions a-c
Units of Labor/Day 5 6 7 8 9
Units of Output/Day 120 140 155 165 168
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 and average variable product of each unit of labor input.
b. Calculate total, average total, average variable, and marginal costs.
c. Can you tell where diminishing marginal returns sets in?
a. b.
Labor Output MP AP TC ATC AVC MC
5 120 -- 24 $600 $5 $0.83 --
6 140 20 23.3 $620 $4.43 $0.86 $1
7 155 15 22.14 $640 $4.13 $0.9 $1.33
8 165 10 20.63 $660 $4 $0.97 $2
9 168 3 18.67 $680 $4.05 $1.07 $6.67
c. Diminishing marginal returns sets in at some point prior to the 5th unit of labor. Note that MP is declining for 5-9 units of labor.
You might also like to view...
The president of which Federal Reserve bank is always a voting member of the Federal Open Market Committee?
A) Philadelphia B) Boston C) Chicago D) New York
Big Roads and Big Pavers are two competing road construction firms. The managers of these two firms should never undertake all of the following actions except which? one?
A) agree to not submit a bid on a government road contract
B) share information and experiences from implementing new government safety standards
C) agree to only operate in a specific area of the country
D) adjust the amount they bid on a government road contract
Which of the following is FALSE with respect to brand names and advertising?
A) Because "differentness" has value to customers, monopolistically competitive firms regard their brand names as valuable. B) Firms use trademarks—words, symbols, and logos—to distinguish their product brands. C) Companies do not regard their brands as valuable private (intellectual) property because the value cannot be quantified. D) There is considerable shifting over time in the market value rankings of various U.S. product brands.
Someone 18 years old who is not employed and is not actively seeking work is considered
A. In the labor force. B. Not in the labor force. C. Unemployed. D. Employed.