Question

8. Inputs and outputs Clancy's Performance Pizza is a small restaurant in Houston that sells gluten-free pizzas. Clancy's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Clancy signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Clancy's kitchen cannot fit more than three ovens, Clancy cannot change the number of ovens he uses in his production of pizzas in the short run. However, Clancy's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Clancy lets them know how many workers he needs for each day of the week. In the short run, these workers are inputs, and the ovens are inputs. Clancy'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) 1 60 7 100

Answer 1

Answer:

In the short run, these workers are variable inputs, and the ovens are fixed inputs.

Labor	Output	Marginal Product of Labor
0	0	-
1	60	60-0=60
2	100	100-60=40
3	130	130-100=30
4	150	150-130=20
5	160	160-150=10

Production Function QUANTITY OF OUTPUT (Pizzas) LABOR (Number of workers)

Number of workers	output	Fixed cost ($)	Variable cost ($)	Total cost ($) = FC+VC
0	0	20	0	20
1	60	20	30	50
2	100	20	60	80
3	130	20	90	110
4	150	20	120	140
5	160	20	150	170

Total Cost TOTAL COST (Dollars) 0 20 180 200 40 60 80 100 120 140 160 QUANTITY OF OUTPUT (Pizzas)

False

Explanation:

The production function reflects the law of decreasing return, because MPL is decreasing.