Ali Pizza’s production function is shown in the table above. Ali currently operates
Plant2. He hires workers at a wage rate of $50 a day and his total fixed cost is $150.
a) Calculate Ali Pizza’s total variable cost and total cost for each output level. (5 marks)
b) Calculate the marginal costs. (5 marks)
c) Calculate the average fixed costs, average variable costs, and average total costs.
(5 marks)
d) Suppose that total fixed cost increases to $200. Explain what changes occur in the costs.