Question

Table 1. Production and Counctions of Suppose is the feed input and the valable input. Price of K-56 Price of L 1. Refer to Table 1. Price of Question 2 Refer to Table 1. When TP-32.MC

Answer 1

Price of K = $6 and K is fixed .So FC = $(10)(6)=$60

Price of labor = $10 Because VC= AVC(TP)= wL

Now, we can see that When L=1, AVC = 5 And TP= 2 , so w = $10

K	L	TP= Summation of MP	MP=(Change in TP)	FC	VC= wL	TC=FC+VC	AFC= FC/TP	AVC= VC/TP	ATC= TC/TP	MC= (Change in TC/change in TP)
10	0	0	-	60	0	60	-	-	-	-
10	1	2	2	60	(5)(2)= 10	70	30	5	35	5
10	2	6	4	60	20	80	10	3.33	13.33	2.5
10	3	16	10	60	30	90	3.75	1.87	5.62	1
10	4	24	8	60	40	100	2.5	1.67	4.17	1.25
10	5	29	5	60	50	110	2.06	1.72	3.78	2
10	6	32	3	60	60	120	1.87	1.87	3.74	3.33
10	7	33	1	60	70	130	1.81	2.12	3.93	10

1. Price of L= $10. Hence,option(B) is correct.

2. When TP=32 , MP= 3 . Hence,option(D) is correct.

3. When L = 3 , ATC = $5.625. Hence, option(C) is correct.

4. If Pk changes to $8 , then marginal cost are not affected because MC only affected by changes in variable cost. Hence,option(A) is correct.