Question

Question 5 1 pts Case 1. Suppose a coffee shop's only varlable input is labor. When 20 workers are hired, the average product of labor is 250 (cups/worker), and the marginal product of the 20h worker is 200 (cups/worker). The price of labor is $200 per worker. The cost of all foced inputs is $1000, Refer to Case 1. When 20 workers are hired, the marginal cost of coffee is $ per cup e 05 o 08 Question 6 1 pts Refer to Case 1. When 20 workers are hired, the average variable cost is S o 05 10 12 1 pts Question 7 Refer to Case 1.When 20 workers are hired, the average total cost is o increasing o decreasing at ts minimum at ts maximum

Answer 1

1) Cost of all fixed inputs = 1000

VC of 19 workers = 19*200 = 3800

TC = 1000+3800 = 4800

VC of 20 workers = 20*200 = 4000

TC = 1000+4000 = 5000

Marginal cost = 5000-4800/change in Q = 200/200 =1

option(D)

2) AVC=TVC/Q

TP=AP*L = 250*20 = 5000

= 4000/5000

= 0.8

Option(B)

3) ATC=TC/Q

=5000/5000

= 1

Since MC=ATC, ATC=at its minimum

Option(C)