Table 4.1 Units of labor Units of Output Average Product Marginal Product Fixed
ID: 1225057 • Letter: T
Question
Table 4.1
Units of labor
Units of Output
Average
Product
Marginal
Product
Fixed
Cost
Variable Cost
Total
Cost
Average Fixed Cost
Average Variable Cost
Average
Total Cost
Marginal Cost
0
0
20
4,000
40
10,000
60
15,000
80
19,400
100
23,000
The first two columns give the firm's short run production function when the only variable input is labor, and capital (the fixed input) is held constant at 5 units. The price of capital is $2,000 per unit and the price of labor is $500 per unit.
a) Complete the table.
b) What is the relationship between average product and average variable cost?
c) What is the relationship between the marginal product and marginal cost?
Units of labor
Units of Output
Average
Product
Marginal
Product
Fixed
Cost
Variable Cost
Total
Cost
Average Fixed Cost
Average Variable Cost
Average
Total Cost
Marginal Cost
0
0
20
4,000
40
10,000
60
15,000
80
19,400
100
23,000
Explanation / Answer
Average Product of labor = Units of output / amount of labor
Marginal product of labour = changes in output / changes in units of labor
b. When AP is maximum AVC is minimum, when AP increases AVC will fall.
c. When MP is higest the MC is lowest.
Units of Labor(L) Units of output(Q) Average product Marginal Product Fixed cost Variable cost Total cost Average fixed cost Average variable cost Average total cost Marginal cost 0 0 - - 10000 0 10000 - - - - 20 4000 200 200 10000 10000 20000 2.5 2.5 5 2.5 40 10000 250 300 10000 20000 30000 1 2 3 1.67 60 15000 250 250 10000 30000 40000 0.67 2 2.67 2 80 19400 242.50 220 10000 40000 50000 0.52 2.58 3.10 2.27 100 23000 230 180 10000 50000 60000 0.43 2.17 2.60 2.78Related Questions
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