Refer to below scenario and table to answer rest of the questions (I point each)

Question

Refer to below scenario and table to answer rest of the questions (I point each). Question 5: The Costs of Production (10 points total) There are four homes along Minnetrista, which surrounds a small plot of land. The land currently has no trees, and the 4 homoowners-Andrew, Brady, Chase, and Davis- are considering the idea of contributing to a pool of moncy that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximurn amount that each homeowner is willing to contribute toward Refer to below table to answer all questions Marginal ProductVariable Cost Fixed Cost SO S10 Chase 120 110 80 350 First tree Second tree Third tree Fourth tree $115 110 100 50 $100 50 S10 50 30 100 120 S10 S10 10 530 Hint: Find Total WTP of each tree to answer questions e and f. For the remaining questions you need to divide the cost of the tree by four to get a per-person cost&compare; to the individual WTP) All questions are worth point each (except i which is worth 3 ½ points). e. Suppose the cost to plant each tree is $300. How many trees should be planted to maximize the total surplus of the four homeowners? a. What is the marginal product of the second worker (A)? f. Suppose the cost to plant each tree is S90. How many trees should be planted to maximize the total b. What is the marginal product of the third worker (B)? surplus of the four homoowners? g. Suppose the cost to plant each tree is $380 and the 4 homoowners have agreed to split all tree- planting costs equally. Which homeownerís) would be opposed to planting any trees? c. What is the total output of four workers (C)? d. What is the total output of flve workers (D)? h. Suppose the cost to plant each tree is $120 and the 4 homeowners have agreed to split all tree- planting costs equally. How many trees would Andrew prefer to plant? e. What is the marginal product of the sixth worker (E)? f. What is the average total cost (ATC) of producing 525 units of output? i. Suppose the cost to plant each tree is $220 and the 4 homeowners have agreed to split all tree- planting costs equally. Which homeowners) would be in favor of planting at least 3 trees? [Hint: Recall the denominator here is the output O. not labor g. What is the average variable cost (AVC) of producing 500 units of output? j. Suppose the cost to plant each tree is $340 and the 4 homeowners have agreed to split all tree- (Hint: Recall the denominator here is the output Q not labor planting costs equally. Which homeowner(s) would be in favor of planting at least 1 tree?

Explanation / Answer

Labor Output MP VC FC 0 0 0 10 1 200 200 20 10 2 350 150 40 10 3 450 100 60 10 4 500 50 80 10 5 525 25 100 10 6 530 5 120 10 a. A = Total product of second worker - total product of first worker. A = 350-200 = 150 b. Marginal product of third worker = Total product of third worker - Total product of second worker B = 450-350 = 100 c. Total output of four workers: Marginal product of 4 workers = TP of four worker -Tp of three workers TP of four workers = MP of fourth eorker +TP of three workers C = 450+50 = 500 d. Total output of five workers: Marginal product of5th workers = TP of five worker -TP of four workers TP of five workers = MP of fifth worker +TP of four workers D = 500+25 = 525

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