Question

Question 22 We have the following information for a firm that has no fixed costs and uses only one variable input: labour. Firm hires 1 worker Firm hires 2 workers 60 130 $4 $3 ATC a) The marginal product of the 2nd worker is a. -1 b. 70 C. Not enough information to determine d. 130 b) This firm is currently experiencing a. constant marginal product b. Not enough information to determine. c. increasing marginal product c) The marginal cost of going from 60 to 130 units of output is: a. $1.00 b. Not enough information to determine c. $4.00 d. $2.14

Answer 1

Answer
a)

marginal product of n th worker =total output of n workers - total output of n-1 workers
MP(n)=TP(n)-TP(n-1)
MP(2)=130-60=70
Option b

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b)
Option c
As the marginal product is increasing so the firm is facing increasing marginal product
as it increased from 60 to 70 units

c)
answer
option d
TC=ATC*Q
TC(60)=4*60=240 and TC(130)=3*130=390

MC(n)=(TC(n)-TC(p))/(n-p)
MC(n)=marginal cost of n th unit
TC(n)=Total cost of n units of output
TC(p)=Total cost of p unit of output
here, n>p
MC(130)=(390-240)/(130-60)
=2.14285714
=2.14