Question

Consider a production process where flowers are grown (the output) using gardeners (labor) and greenhouses (capital). The quantity of flowers grown per day with various combinations of labor and capital are shown in the table below. Suppose that each gardener is paid $160 per day and the greenhouse is rented for $350 per day. Fill in total cost in the table below. (Enter your responses as integers.) Labor Capital Output Total Cost $ 350 510 40 120 670 830 160 180 990 190 1150 Next, fill in average total cost in the table. (Enter your responses as real numbers rounded to two decimal places.) Labor Capital Output Average Total Cost Total Cost $350 510 40 120 670 160 830 180 990 190 1,150

Answer 1

Labor	Capital	Output	Total Cost ($)	Average Total Cost ($)
0	1	0	350	-
1	1	40	510	12.75
2	1	120	670	5.58
3	1	160	830	5.19
4	1	180	990	5.50
5	1	190	1150	6.05

Total Cost = Capital * Rent of Greenhouse + Labor * Wage rate = 1* $350 + Labor * $150 = $350 + Labor * $150

Average Total Cost = Total Cost/Output

Answer 2

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