Solve the following problem:
Q: For a given scale of plant, the following table gives the total weekly output of table attainable using varying quantities of labor.
|
Workers
|
Output
|
Marginal Product
|
Average product
|
|
0
|
0
|
|
|
|
1
|
2
|
|
|
|
2
|
5
|
|
|
|
3
|
10
|
|
|
|
4
|
18
|
|
|
|
5
|
24
|
|
|
|
6
|
27
|
|
|
|
7
|
29
|
|
|
|
8
|
21
|
|
|
Fill the table
Draw the marginal product and the average product (remember, the MP must be plotted at midpoints)
Now, consider the short run costs. Suppose the cost of 1 worker is $300 a month and the fixed cost is $1500 a month. Fill the following table.
|
Workers
|
Output
|
TFC
|
TVC
|
TC
|
MC
|
AFC
|
AVC
|
ATC
|
|
0
|
0
|
|
|
|
|
|
|
|
|
1
|
2
|
|
|
|
|
|
|
|
|
2
|
5
|
|
|
|
|
|
|
|
|
3
|
10
|
|
|
|
|
|
|
|
|
4
|
18
|
|
|
|
|
|
|
|
|
5
|
24
|
|
|
|
|
|
|
|
|
6
|
27
|
|
|
|
|
|
|
|
|
7
|
29
|
|
|
|
|
|
|
|
|
8
|
31
|
|
|
|
|
|
|
|
Graph the TC, TFC and TVC on the same graph.
Graph the AVC, AFC, ATC and MC on the same graph.
Now suppose that the cost of a worker increases to $400 a month. Explain the effect of this change on the MC, AVC, AFC and ATC curves.