a. Complete the following table. firm produces its output using only labor. Each
ID: 1152559 • Letter: A
Question
a. Complete the following table. firm produces its output using only labor. Each unit of labor costs $150. When appropriate, round to two decimal places. (13 points)
Units of Labor
Total Product
Average Product of Labor
Marginal Product of Labor
Variable Cost
Average Variable Cost
Marginal Cost
0
0
___
___
___
___
___
1
150
2
200
3
230
4
800
5
150
b. Identify the relationship between MPL and MC. Explain what drives this relationship. In other words, why are MPL and MC related the way you stated? (8 points)
Units of Labor
Total Product
Average Product of Labor
Marginal Product of Labor
Variable Cost
Average Variable Cost
Marginal Cost
0
0
___
___
___
___
___
1
150
2
200
3
230
4
800
5
150
Explanation / Answer
Total Average marginal variable Average Marginal Units Labur Product Product Product Cost Variable cost Cost 0 0 0 0 0 0 0 1 150 150 150 150 1 1 2 400 200 250 300 0.75 0.6 3 630 210 230 450 0.714 0.65 4 800 200 170 600 0.75 0.88 5 950 190 150 750 0.79 1 The relation between the MPL and MC is inverse relation. As the MPL rises the Marginal c cost falls. And when the MPL began to f all, the Marginal cost rises The Relationship between them exist because of the fact that the Marginal cost computation is based on: The marginal productivity derived from each labour unit cost. The marginal cost per unit is computed with the help of following formula: Marginal cost per unit: Incremental ccosst / Marginal productivity
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