Question

Inputs and outputs Charles's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Charles's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Charles signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Charles's kitchen cannot fit more than three ovens, Charles cannot change the number of ovens he uses in his production of pizzas in the short run. However, Charles's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Charles lets them know how many workers he needs for each day of the week. In the short run, these workers are inputs, and the ovens are inputs. Charles's daily production schedule is presented in the following table. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Number of Workers Output Marginal Product of Labor (Pizzas) (Pizzas) 0 0 1 70 2 120 3 160 4 190 5 200 On the following graph, plot Charles's production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0). Production Function 0 1 2 3 4 5 200 180 160 140 120 100 80 60 40 20 0 QUANTITY OF OUTPUT (Pizzas) LABOR HIRED (Number of workers) Suppose that labor is Charles's only variable cost and that he has a fixed cost of $10 per day and pays each of his workers $50 per day. Use the orange points (square symbol) to plot Charles's total cost curve on the following graph using the quantities from the preceding table. Total Cost 0 20 40 60 80 100 120 140 160 180 200 280 260 240 220 200 180 160 140 120 100 80 60 40 20 0 TOTAL COST (Dollars) QUANTITY OF OUTPUT (Pizzas) True or False: The shape of the production function reflects the law of diminishing marginal returns. True False

Answer 1