You are given the following short-run information for an individual firm. Labor (L) is the only variable input. The price of labor is $200/week. Fixed costs are $100/week. Complete the rest of the table. Describe the relationship between the MP and
MC. At which output level does the law of diminishing returns set in?
As marginal product rises from 0 to 50, marginal cost falls from $10 to $4. Then marginal product falls from 50 to 2, as marginal cost increases from $4 to $100. Diminishing marginal returns set in beyond output level 200. [Note to instructors: output increases by more than one unit, which differs from text example on p. 174.]
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Economists use one standard set of assumptions to answer all economic questions
a. True b. False Indicate whether the statement is true or false
Figure 3.3 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $15, we would expect that:
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