Question

In class A7 - Productivity and Costs (Chapter 11) 1. Calculate the Average Product and Marginal Product of the variable input Inputs No. of Average Marginal boats Product Product Labour of Draw the AP and MP curves of the variable input. Remember AP and MP are measured in units of output! Identify the max point of AP of Labour and MP of Labour (the points of diminishing returns for both curves). The diagram need not be to scale. 2. The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital. When answering the questions, you are to assume that the wage per unit of labour is $25, price of capital is $10 per unit and capital is fixed at 10 units. Labour per unit of time Total output 25 175 250 a) What is Average Fixed Cost of producing 25 units of output? b) What is the Average Variable Cost of producing 305 units of output? c) What is the Average Total Cost for producing 175 units of output? Econ1150-A7-Top-Ch11

Answer 1

1.

Inputs of labor	No. of boats	Average product = TP/L	Marginal product =Change in TP
0	0	-	-
1	2	2	2
2	5	2.5	3
3	9	3	4
4	14	3.5	5
5	18	3.6	4
6	21	3.5	3
7	23	3.28	2
8	24	3	1

By plotting these we get the AP and MP curves as shown below :

AP, MP 5 T 4.5t 4 t Max. point of me - Maxipoint of Al 2.5 -MP ost 6 7 8 9 5 4 0 1 2 3 Inputs of labor