9. The following table summarizes the short-run production function for your fir

Question

9. The following table summarizes the short-run production function for your firm. Your product sells for $6 per unit, labor costs $6 per unit, and rental price of capital is $10 per unit. Complete the following table, and then answer the accompanying questions.

K L Q MPK APK APL VMPK

5 1 0

5 2 5

5 3 10

a. Which inputs are fixed inputs? WHY? …………………………….

b. Which are the variable inputs? WHY? ……………………………….

c. How much are your fixed costs? ………………………………………

d. What is the variable cost of producing 10 units of output? SHWO WORK

Explanation / Answer

as capital is fixed input we can estimate MPK ( marginal product of capital= change in Q/ change in K), therefore we can't estimate VMPK(value of marginal product of capital = price of output* MPK)

ans a) capital is fixed input. because capital is fixed at 5 for all levels of production

b) labour is variable input . because more labor is used with fixed capital to increase the production

c) fixed cost= rental price of capital* no. of units of capital = 10*5 = $50

d) for production of 10 units , units of variable input or labor used=3

      variable cost= units of variable input* labor cost =3 * 6 = 18

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.