Submitted by: Submitted by andyleung300
Views: 246
Words: 673
Pages: 3
Category: Business and Industry
Date Submitted: 12/08/2012 07:06 PM
Question One
a.) Calculate Marginal and Average Products
Capital (K) Labor (L) Total Product (TP) Average Product (AP) Marginal Product (MP)
10 0 0 0.00 0.00
10 1 5 5.00 5.00
10 2 15 7.50 10.00
10 3 30 10.00 15.00
10 4 50 12.50 20.00
10 5 75 15.00 25.00
10 6 85 14.17 10.00
10 7 90 12.86 5.00
10 8 92 11.50 2.00
10 9 92 10.22 0.00
10 10 90 9.00 -2.00
b.) Total Product, Marginal and Average Products Curve
c.) Diminishing Marginal Returns
The range of output exhibiting diminishing marginal returns begins when five units of labor was employed. Marginal Product continues to decline as additional units of labor was employed and eventually turned negative at ten units of labor employed.
d.) Maximum Average Product
Average Product was maximized when five units of labor was employed
Question Three
Cost Function a.) Implicit/Explicit Cost b.) Fixed/Variable Cost
Lease on the building Explicit Fixed
Inventory Explicit Variable
Wages for two workers Explicit Fixed assuming salaried, not hourly paid
Electricity Explicit Variable
Insurance Explicit Fixed
Question Five
a.) TFC, TVC, TC, AFC, AVC, ATC, AND MC
(K) (L) (TP) (TFC) (TVC) (TC) (AFC) (AVC) (ATC) (MC)
10 0 0 200.00 0.00 200.00 0.00 0.00 0.00 0.00
10 1 5 200.00 10.00 210.00 40.00 2.00 42.00 2.00
10 2 15 200.00 20.00 220.00 13.33 1.33 14.67 1.00
10 3 30 200.00 30.00 230.00 6.67 1.00 7.67 0.67
10 4 50 200.00 40.00 240.00 4.00 0.80 4.80 0.50
10 5 75 200.00 50.00 250.00 2.67 0.67 3.33 0.40
10 6 85 200.00 60.00 260.00 2.35 0.71 3.06 1.00
10 7 90 200.00 70.00 270.00 2.22 0.78 3.00 2.00
10 8 92 200.00 80.00 280.00 2.17 0.87 3.04 5.00
10 9 92 200.00 90.00 290.00 2.17 0.98 3.15 0.00
10 10 90 200.00 100.00 300.00 2.22 1.11 3.33 -5.00
b.) TFC, TVC, TC, AFC, AVC, ATC, AND MC Curves
c.) Minimum Average Total Cost and Minimum Average Variable Cost
Average Total Cost is minimized when 90 units was produced with seven units of labor...