Question

Answer the following questions assuming that employees are paid $10/hour. Note: If necessary round your answers to two decimal places. a) Based on the table in part b), what are the fixed costs for this firm? Fixed Cost = $0 b) Fill in the table by calculating the marginal product, total costs, and marginal costs at each quantity of employee hours. Employee Hours Output Marginal Product Total Costs Marginal Costs 35 0 0 0 0 öo 0 0 AWNO Iooooooo 0 c) Whenever marginal product increases, marginal cost will O decrease O increase d) Whenever marginal product decreases, marginal cost will O decrease o increase

Answer 1

MP = change in Output/Change in work hours

TC = FC+(10*Hours)

MC = change in TC/change in output

Hours	Output	MP	TC	MC
0	0		35
2	8	8	55	2.50
3	17	9	65	1.11
4	30	13	75	0.77
6	64	17	95	0.59
8	88	12	115	0.83
9	96	8	125	1.25
10	99	3	135	3.33

a) Based on the table, FC = 35

c) When MP increases, MC will decrease

d) When MP decreases, MC will increase