Assignment
Assignment- Please return by Monday February 23, 2015 no later than 5pm
Chapter 5
Technical Question 1
The following table shows data for a simple production function.
Capital (K)
Labor (L)
Total Product (TP)
Average Product (AP)
Marginal Product (MP)
10
10
10
10
10
10
10
10
10
10
10
0
1
2
3
4
5
6
7
8
9
10
0
5
15
30
50
75
85
90
92
92
90
-
-
a. From the information in the table, calculate marginal and average products.
b. Graph the three functions (put total product on one graph and marginal and average products on another).
c. For what range of output does this function have diminishing marginal returns?
d. At what output is average product maximized?
Technical Question 3
Jim is considering quitting his job and using his savings to start a small business. He expects that his costs will consist of a lease on the building, inventory, wages for two workers, electricity, and insurance.
a. Identify which costs are explicit and which are opportunity (implicit) costs.
b. Identify which costs are fixed and which are variable.
Technical Question 5
The following table shows data for the simple production function used in Question 1. Capital costs this firm $20 per unit, and labor costs $10 per worker.
K
L
TP
TFC
TVC
TC
AFC
AVC
ATC
MC
10
10
10
10
10
10
10
10
10
0
1
2
3
4
5
6
7
8
0
5
15
30
50
75
85
90
92
a. From the information in the table, calculate total fixed cost(TFC), total variable cost(TVC), total cost(TC), average fixed cost(AFC), average variable cost(AVC), average total cost(ATC), and marginal cost(MC).
b. Graph your results, putting TFC, TVC, and TC on one graph and AFC, AVC, ATC, and MC on another.
c. At what point is average total cost minimized? At what point is average variable cost minimized?
Chapter 6 Technical Question 3
Industry studies often suggest that firms may have long-run average cost curves that show some output range over which there are economics of scale and a wide range of output over which long-run average cost is constant;
Chapter 5
Technical Question 1
The following table shows data for a simple production function.
Capital (K)
Labor (L)
Total Product (TP)
Average Product (AP)
Marginal Product (MP)
10
10
10
10
10
10
10
10
10
10
10
0
1
2
3
4
5
6
7
8
9
10
0
5
15
30
50
75
85
90
92
92
90
-
-
a. From the information in the table, calculate marginal and average products.
b. Graph the three functions (put total product on one graph and marginal and average products on another).
c. For what range of output does this function have diminishing marginal returns?
d. At what output is average product maximized?
Technical Question 3
Jim is considering quitting his job and using his savings to start a small business. He expects that his costs will consist of a lease on the building, inventory, wages for two workers, electricity, and insurance.
a. Identify which costs are explicit and which are opportunity (implicit) costs.
b. Identify which costs are fixed and which are variable.
Technical Question 5
The following table shows data for the simple production function used in Question 1. Capital costs this firm $20 per unit, and labor costs $10 per worker.
K
L
TP
TFC
TVC
TC
AFC
AVC
ATC
MC
10
10
10
10
10
10
10
10
10
0
1
2
3
4
5
6
7
8
0
5
15
30
50
75
85
90
92
a. From the information in the table, calculate total fixed cost(TFC), total variable cost(TVC), total cost(TC), average fixed cost(AFC), average variable cost(AVC), average total cost(ATC), and marginal cost(MC).
b. Graph your results, putting TFC, TVC, and TC on one graph and AFC, AVC, ATC, and MC on another.
c. At what point is average total cost minimized? At what point is average variable cost minimized?
Chapter 6 Technical Question 3
Industry studies often suggest that firms may have long-run average cost curves that show some output range over which there are economics of scale and a wide range of output over which long-run average cost is constant;