Question

Darnell's Burrito Stand is a small restaurant that sells burritos. For Darnell, stoves are a fixed input and workers are variable inputs. Assume that labor is Darnell's only variable cost. Darnell has a fixed cost of $100 per day and pays each of his workers $80 per day.

190 $500 decreasing When hiring the first and second workers, Darnell's Burrito Stand faces marginal returns to increasing Over the range of workers for which the marginal product of labor is decreasing, Darnell's Burrito Stand faces marginal cost. Grade It Now Save & Continue Continue without saving

Darnell's total product schedule and total cost at each level of labor are presented in the following table.

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.)

Quantity of Labor	Quantity of Output	Marginal Physical Product of Labor	Total Cost	Marginal Cost
(Workers)	(Burritos per day)	(Burritos per day)	(Dollars per day)	(Dollars per burrito)
0	0		$100
1	40		$180
2	120		$260
3	160		$340
4	180		$420
5	190		$500

When hiring the first and second workers, Darnell's Burrito Stand faces   marginal returns to labor.

Over the range of workers for which the marginal product of labor is decreasing, Darnell's Burrito Stand faces   marginal cost.

Answer 1

Quanitiy of workers	Quantity of output	Marginal Physical Product of labor	Total cost	marginal cost
0	0	---	100	----
1	40	40	180	2
2	120	80	260	1
3	160	40	340	2
4	180	20	420	4
5	190	10	500	8

Marginal Physical Product of labor = (Change in quantity of output / Change in Quantity of workers)

Marginal cost = (change in total cost / change in quantity)

When hiring the first and second workers, Darnell's Burrito Stand faces increasing marginal returns to labor.

The marginal physical productivity of labor is rising in when the first and second workers hired.

Over the range of workers for which the marginal product of labor is decreasing, Darnell's Burrito Stand faces increasing marginal cost

The marginal product of labor is decreasing for the workers 3 to 5 units, in this range of workers the marginal cost is increasing.