Question

1. The following production table shows the amount of output (a) that can be produced with various combinations of labor (L)
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Answer #1
As per the information provided in the question, the following output is derived from the given table in question
the Capital (K) is a fixed input it's quantity is = 1 unit
price of one unit of capital = $100
Price of unit of labour or wage is =$25
Capital, K Labour, L Total Product
or Q
Total Fixed
cost (TFC) in $
Total Variable
Cost (TVC) in $ = Labour x Wage ($25)
Total cost (TC) in
$ = TFC + TVC
Average Fixed cost (AFC) in $ = TFC / Q Average variable cost (AVC) in $ = TVC / Q Average total cost (ATC) in $ =AFC + AVC Marginal cost (MC) in $ =
change in total cost (TC )/ change in output (Q)
1 0 0 100 0 100 - - - -
1 1 20 100 25 125 5.00 1.25 6.25 1.25
1 2 50 100 50 150 2.00 1.00 3.00 0.83
1 3 87 100 75 175 1.15 0.86 2.01 0.68
1 4 100 100 100 200 1.00 1.00 2.00 1.92
1 5 112 100 125 225 0.89 1.12 2.01 2.08
1 6 122 100 150 250 0.82 1.23 2.05 2.50
1 7 132 100 175 275 0.76 1.33 2.09 2.50
1 8 141 100 200 300 0.71 1.42 2.13 2.78
1 9 150 100 225 325 0.67 1.50 2.17 2.78
1 10 158 100 250 350 0.63 1.58 2.21 3.13
Total Fixed cost is independent of output or product so it remains constant as $100
Labour is the variable factor and it is dependent on output, it means more product can be produced with more labour
At zero unit of product TVC will be zero because units of labour is zero
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