the table above shows the randy’s shirt short run Labor (workers)-Total product(

Question

the table above shows the randy’s shirt short run Labor (workers)-Total product( hirtsper day)-- 0 20 36 48 56 60 0 2 3 4 5 le above shows Randy's Shirts short-run product unction. ndy hires 0. es workers at a wage rate of $50 a day and his total fixed cost is What is the marginal product of the 3rd worker? What is R andy's average fixed cost if 48 shirts are produced? andy's average variable cost if 56 shirts are produced? What is R What is R Randy's marginal cost of producing the 52nd sweater andy's average total cost if 48 sweaters are produced?

Explanation / Answer

Marginal product of 3rd worker-

total outut from 4th worker- total output from 3rd worker

= 48-36

i.e 12 shirts.

Average fixed cost if 48 shirts are produced-

Total Fixed cost=$100

Average fixed cost= Total fixed cost/ number of shorts produced

= 100/48

= 2.083$

Randy's average variable cost if 56 shirts are produced-

The variable cost= $50 per day per worker

So for producing 56 shirts she needs 4 workers , the variable cost= 50*4

=$200

Average variable cost= 200/56

= 3.571$

Randy's marginal cost of producing the 52nd sweater-

The variable cost of producing 51st sweater is (50*4) =200$

and the cost of producing 52nd sweater is 50*4=200$

So there is no marginal cost i.e 0

Randy's average total cost if 48 sweaters are produced-

Total cost= Fixed cost+ Variable cost

=100+(50*3)

= 100+ 150

=$250

Average total cost = 250/48

= 5.208$

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