7.3 The following data show the total output for a firm when different amounts o

Question

7.3 The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital. Assume that the wage per unit of labour is $10 and the cost of the capital is $50 Labour per period Total output per period 10 30 90 132 150 Diminishing marginal product of labour is first observed when the firm changes the amount of labour hired from A) 0 to 1 units B) 1 to 2 units. C) 2 to 3 units D 3 to 4 units E) 4 to 5 units. 74 The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital. Assume that the wage per unit of labour is S10 and the cost of the capital is $50 Total 10 30 150 The average total cost when producing 90 units of output is approximately A) 27 cents B) 30 cents C) 33 cemts D) 89 cents E) S2667

Explanation / Answer

1> d 3 to 4 unit

Reason

The marginal product from 3 to 4 is 42=132-90 which is less than 60=90-30

2> So, there are 3 labors.

Labor cost is $30

So, total cost is $80, thus ATC is $80/90=89 cents

So, d is correct.

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