Questions:
Question 1.You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
|
Workers
|
Total Labor Cost
|
Output
|
Total Revenue
|
|
1
|
$50
|
100
|
$700
|
|
2
|
$100
|
250
|
$1,150
|
|
3
|
$150
|
300
|
$1,440
|
|
4
|
$200
|
380
|
$1,620
|
|
5
|
$250
|
440
|
$1,720
|
|
6
|
$300
|
480
|
$1,780
|
|
7
|
$350
|
500
|
$1,820
|
Part A) What is the marginal product of the second worker?.
Part B) What is the marginal revenue product (MRP) of the fourth worker?
Part C) What is the marginal cost (MC) of the first worker?
Part D) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.
Question 2. Answer the next questions (Parts A and B) on the basis of the following cost data for a firm operating in pure competition.
|
Output
|
TFC
|
TVC
|
|
0
|
$200.00
|
0.00
|
|
1
|
$200.00
|
50.00
|
|
2
|
$200.00
|
120.00
|
|
3
|
$200.00
|
200.00
|
|
4
|
$200.00
|
300.00
|
|
5
|
$200.00
|
450.00
|
|
6
|
$200.00
|
650.00
|
Part A) Refer to the above data. If the product price is $75 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.
Part B) Refer to the above data. If the product price is $100 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.