L. Please refer to the following table. Quantity of TotalMarginal Average Labour
ID: 1134498 • Letter: L
Question
L. Please refer to the following table. Quantity of TotalMarginal Average Labour Output Product of Product of Labour Labour 400 900 1500 1900 2200 4 6 2400 7 2300 a. Fill in the missing values in the table above. A student looked at the data in the table above and drew this conclusion: The marginal product of labour is increasing for the first three workers hired, then it declines for the next three workers. I guess each of the first three workers must have been hard workers. Then this firm must have had to settle for increasingly poor workers. Do you agree with the student's analysis? Briefly explain. b. Assume that fixed cost of capital is $500 and wage rate is same for all workers at $1000 per worker. Create 4 more columns to this table showing Total Fixed Cost, Total Variable Cost. Total Cost and Marginal Cost. Now add 3 more columns showing AFC, AVC and ATC. c. At what output is the ATC the lowest?Explanation / Answer
a. Yes as we can see at the column marginal product of labor for the first three labors it increases and the next three it decreases.
b.
Quantity of labor
Total Output
Marginal Product of Labor
Average Product of Labor
Total Fixed Cost
Total Variable Cost
Total Cost
Marginal Cost
AFC
AVC
ATC
0
0
500
0
500
1
460
460
460.00
500
1000
1500
2.17
1.09
2.17
3.26
2
900
440
450.00
500
2000
2500
2.27
0.56
2.22
2.78
3
1500
600
500.00
500
3000
3500
1.67
0.33
2.00
2.33
4
1900
400
475.00
500
4000
4500
2.50
0.26
2.11
2.37
5
2200
300
440.00
500
5000
5500
3.33
0.23
2.27
2.50
6
2400
200
400.00
500
6000
6500
5.00
0.21
2.50
2.71
7
2300
-100
328.57
500
7000
7500
-10.00
0.22
3.04
3.26
c. At output of 1500 the ATC is lowest.
Quantity of labor
Total Output
Marginal Product of Labor
Average Product of Labor
Total Fixed Cost
Total Variable Cost
Total Cost
Marginal Cost
AFC
AVC
ATC
0
0
500
0
500
1
460
460
460.00
500
1000
1500
2.17
1.09
2.17
3.26
2
900
440
450.00
500
2000
2500
2.27
0.56
2.22
2.78
3
1500
600
500.00
500
3000
3500
1.67
0.33
2.00
2.33
4
1900
400
475.00
500
4000
4500
2.50
0.26
2.11
2.37
5
2200
300
440.00
500
5000
5500
3.33
0.23
2.27
2.50
6
2400
200
400.00
500
6000
6500
5.00
0.21
2.50
2.71
7
2300
-100
328.57
500
7000
7500
-10.00
0.22
3.04
3.26
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