The information in the following table is for a coffee shop. The wage at this fi
ID: 1209170 • Letter: T
Question
The information in the following table is for a coffee shop. The wage at this firm is $10.
Complete the table, and explain how you calculated each column.
a) What happens to the marginal product of labor as the coffee shop employs more workers? Explain in 1-2 sentences why this happens.
b) What happens to the marginal cost of labor as the coffee shop employs more workers? Explain in 1-2 sentences why this happens.
c) Labor costs are just one example of a kind of a cost faced by the coffee shop. What are three other costs that a coffee shop normally has to incur in order to operate? List at least one variable cost and one fixed cost in your answer and explain each one.
Workers Output ( Cups of Coffee) Marginal Product of Labor (change in output divided by the change in number of workers) Labor Cost Marginal Cost of Labor ( Change in Labor Cost divided by the change in output) 0 0 -------------------- 0 ------------------- 1 6 1 x $10= $10 2 14 2 x $10 = $20 3 21 3 x $10 = $30 4 27 4 x $10 = $40 5 31 5 x $10 = $50 6 33 6 x $10 = $60 7 34 7 x $10 = $70Explanation / Answer
a.) The marginal product of labor is likely to increase initially because when there are more workers, each is able to specialize in an aspect of the production process in which he or she is particularly skilled. Eventually, there will be enough workers and there will be no more gains from specialization. At this point, the marginal product will begin to diminish.
b.) as we can see each extra labor costs $10 to coffee shop but each extra labor's contribution to output first increases then it reduces due to reason just exaplined earlier. this also means that MCL initially reduces and when eventually the limit reaches it starts increasing.
c.) other costs can be
1.) cost of raw materail ( payment made to coffee bean provider )
2.) costs incurred on Equipments and its installation.
3.) Advertising and promotion.
workers MPL MCL 0 --- --- 1 6 1.66 2 7 1.43 3 7 1.428 4 6.75 1.481 5 6.2 1.613 6 5.5 1.82 7 4.86 2.06Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.