Question

2. Inputs and outputs Raphael's Performance Pizza is a small restaurant in San Diego that sells gluten-free pizzas. Raphael's very tiny kitchen has barely enough room for the two ovens in which his workers bake the pizzas. Raphael signed a lease obligating him to pay the rent for the two ovens for the next year. Because of this, and because Raphael's kitchen cannot fit more than two ovens, Raphael cannot change the number of ovens he uses in his production of pizzas in the short run. However, Raphael's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Raphael lets them know how many workers he needs for each day of the week. In the short run, these workers are variable inputs, and the ovens are fixed inputs. Raphael's daily production schedule is presented in the following table. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Labor (Number of workers) Output (Pizzas) Marginal Product of Labor (Pizzas) 2 50 90 120 3 5 150 On the following graph, plot Raphael's production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0).

Answer 1

Labor (L) Output MPL FC VC=30* L TC=FC+VC 50 60 90 120 120 140 150 150 120 150 Quantity of Output (Pizzas) 10 30 180 5 6 2 3 4 Labor (Number of Workers Total Cost (Dollars) 20 40 120 140 160 60 80 100 Quantity of Output (Pizzas)

Law of diminishing marginal product is demonstrated by the fact that the total output increases at decreasing rate as more and more unit of labors are employed.