hi i need help with explanation 1. Nkechi’s Frozen Yogurt is a small shop that s

Question

hi i need help with explanation

1.

Nkechi’s Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Nkechi

owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle

toppings, and, of course, workers. He estimates that his daily production function when he varies the

number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown

in the accompanying table

Quantity of labor (workers) / Quantity of frozen yogurt (cups) / Marginal Product of Labor

0 0 =

1 110 =

2 200 =

3 270 =

4 300 =

5 320 =

6 330 =

a. What are the fixed inputs and variable inputs in the production of cups of frozen yogurt?

b. What is the marginal product of the first worker? The second worker? The third worker? Why does

marginal product decline as the number of workers increases?

c. For each of the following businesses, what is the likely fixed factor of production that defines the short

run?

d. Potato farm of 160 acres

e. Chinese restaurant

f. Dentist in private practice

g. Car dealership

h. Bank

Explanation / Answer

a. The fixed inputs are those whose quantities do not change as the quantity of output changes: frozen-yogurt machines, refrigerators, and the shop. The variable inputs are those whose quantities do change as the quantity of output changes: frozen-yogurt mix, cups, sprinkle toppings, and workers.

b. Marginal Product of Labour (MPL) for first worker is 110, second worker is 90 and third worker is 70. The MPL of labor declines as more and more workers are added due to the principle of diminishing returns. Since the number of frozen-yogurt machines is fixed, as workers are added there are fewer and fewer machines for each worker to work with, making each additional worker less and less productive.

d. Potato farm of 160 acres: fixed factor are land, machine to plough the field,

e.chinese restaurant: restaurant place, workers in the restaurant, crockery, furniture

f. dentist in private practice: Dental equipments, clinic place, nurse or junior doctor or assistant

g. car dealership: showroom place, cars on display, workers, manager

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