Question

ECON 1150
Out-of-Class ASSIGNMENT 3 [
Total Marks = 15]

1. Suppose that the following table provides a measure of the total production or output, TP from addition successive units of Labour, L of Large 4-Shot latte’s:

Quantity of Labour, QL	Total Production or Output, TP	Marginal Productivity of Labour, MPL	Average Productivity of Labour, APL
0	0
1	3
2	10
3	20
4	35
5	55
6	85
7	110
8	130
9	145
10	155

1. 1. Using the information in the table above, calculate the Marginal Productivity of Labour, MP_L and the Average Productivity of Labour, AP_L for each additional unit of labour from 1 unit to 10 units of labour. (2 Marks)
      
   2. Explain briefly the concept of Diminishing Marginal Productivity and the Division of Labour, L, AND how these concepts are illustrated in the answers from part i above? (4 Marks)
      
2. Suppose that each [variable] unit of Labour, L has a wage rate of $750.00, and the current [fixed] Capital, K is leased at a cost of $1,150.00. C
   
   1. Calculate the Total Fixed Cost, TFC, the Total Variable Cost, TVC, and the Total Cost, TC at each level of Labour, L. AND Given the information in the table and from above, calculate the Marginal Cost, MC from 0 units of labour to 10 units of labour. (3 Marks)
      
   2. Explain briefly but carefully WHY the Marginal Cost, MC can be determined either from the Total Cost, TC or the Total Variable Cost, TVC and result in exactly the same answer? (3 Marks)
      
      

Total Units of Labour, L	Total Fixed Cost, TFC	Total Variable Cost, TVC	Total Cost, TC	Marginal Cost, MC
0
1
2
3
4
5
6
7
8
9
10

3. Given the information in part i above, calculate the Average Fixed Cost, AFC, the Average Variable Cost, AVC, and the Average Total Cost, ATC from 0 units of total output or Productivity to 155 units of total output or Productivity.
   (3 Marks)
   

Total Output or Productivity	Average Fixed Cost, AFC	Average Variable Cost, AVC	Average Total Cost, ATC
0
3
10
20
35
55
85
110
130
145

Answer 1

DECEMBER 2008 2008 338 - 028 WEEK 49 03 Wednesday And ga ТР 3. 10 omto 10 20 1 11 but by To is 20 30 AP Diminshing MP describes that each 3 additional unit of labour initio 6.6 lease the product? 8.75 ivity using labour 14.1 diminisherg 15.7 productivity.es 2.5 1.6 Rh this table 1 observe MP, first 1 and e 2 3 4 5 6. 7 8 9 10 more & 12 12 35 55 85 110 130 145 155 cause 1 20 capital in fixed. 2. 2 To 3 then v. 4 MC 5 - 6 L. FC VG TC MC deriving from 1150 1150 TC or TVC result 1150 75 1225 75 Same became 2 1150 150 1300 75 i TC 3. 1150 225 1375 75 TO ODCP TFC 4. 1150 300 1450 75 5 1150 375 1625 75 Th Tch o 6. 11150 450 1600 75 7 1:50 525 167575 TC Z TUCT TFC. 8 1150 Goo 175o 75 gings 1150 675 18.25 75 10 11150750 11900 175 (TVn-TUNA.) + (TFC.- Tfch MC MC - 0 JANUAR M T W '08 DECEMBER M T W T F S S 1 2 3 4 5 6 7 8 9 10 IN 13 14 18 19 20 21 22 23 24 25 26 27 28 29 30 31 5 6 7 12 13 14 19 20 21 26 27 28 Ton- Tom