Question

Use the data underlying the following two tables: The top table shows this data in production form; the bottom table assumes that capital costs $100/unit and labor costs $100/unit.

1. Please fill in the tables, showing your formulas.

Labor	Capital	Output	Average Product of Labor	Marginal Product of Labor
0	10	0	-----	-----
1	10	30
2	10	80
3	10	140
4	10	190
5	10	230
6	10	260
7	10	280

Show Your Formulas!

Output	Fixed Costs	Variable Costs	Total Costs	ATC	AVC	MC
0	$1000	0		-----	-----	-----
30	$1000	$200
80	$1000	$400
140	$1000	$600
190	$1000	$800
230	$1000	$1000
260	$1000	$1200
280	$1000	$1400

Answer 1

Labor	Capital	Output	Average Product of Labor	Marginal Product of Labor
0	10	0	0	--
1	10	30	30	30
2	10	80	40	10
3	10	140	46.66	6.66
4	10	190	47.5	0.84
5	10	230	46	-1.5
6	10	260	43.33	-2.67
7	10	280	40	-3.33

Average Product of labor = Output / Labor

Marginal Product of labor = Change in Output / Change in Labor

Output	Fixed Costs	Variable Costs	Total Costs	ATC	AVC	MC
0	$1000	$0	$1000	0	0	--
30	$1000	$200	$1200	40	6.66	200
80	$1000	$400	$1400	17.5	5	200
140	$1000	$600	$1600	11.42	4.28	200
190	$1000	$800	$1800	9.47	4.21	200
230	$1000	$1000	$2000	8.69	4.34	200
260	$1000	$1200	$2200	8.46	4.61	200
280	$1000	$1400	$2400	8.57	5	200

Total Cost = Fixed Cost +Variable Cost

Average Total Cost (ATC) = Total Cost / Output

Average Variable Cost (AVC) = Variable Cost / Output

Marginal Cost = It refers to change in total cost when additional units are produced.

MC_n = TC_n - TC_n-1

For eg - At 80 units

MC₈₀ = 1400 - 1200

MC₈₀ = 200