Question

Numbers and Graphs: Production and Costs (Ch 21) L a pre TESLUIT WE USE TAMO WORCES DE pizza restaurant has a fixed cost of $150 per day and pays each worker $270 per day. Fill in the blanks to complete the Marginal Physical Product of Labor column for each worker and the Marginal Cost column at each level of labor. (Hint: Marginal cost is the change in total cost divided by the change in the quantity of output. You can calculate it here by dividing the increase in total cost from hiring one more worker by the marginal physical product from hiring one more worker.) Labor (Workers) or Quantity of Output Marginal Physical Product of Labor (Pizzas per day) (Pizzas per day) Total Cost (Dollars per day) Marginal Cost (Dollars per pizza) 150 420 30 690 960 1,230 1,500 1,770 345 As marginal physical product rises, marginal cost Grade It Nw S ave & Continue Continue without saving o re

Answer 1

At Quantity 30 and labor 1 Marginal physical product of labor=30/1=30, Marginal cost=270(labor cost)/30=$9

At Quantity=75 and labor 2 Marginal physical product of labor=75/2=37.5, Marginal cost=270*2/75=$7.2

At Quantity= 135 and labor=3 Marginal physical product of labor=135/3=45, Marginal cost=270*3/135=$6

At Quantity= 225 and labor =4 Marginal physical product of labor=225/4=56.25, Marginal cost=270*4/225=$4.8

At Quantity=300 and labor=5 Marginal physical product of labor=300/5=60, Marginal cost=270*5/300=$4.5

At Quantity= 345 and labor=6 Marginal physical product of labor=345/6=57.5 , Marginal cost=270*6/345=$4.7

As Marginal physical product rises Marginal cost decreases as we can see from table above