a. Given the following chart and information fill in the missing values. Please write on a separate sheet. Note that r = $50 and w = $100. Use a price of $5.50.
K Labor Total Marginal Average Average VMP of Product Product Product Product Labor of Labor oflabor ofcapital
2 0 0
2 1 25
2 2 65
2 3 120
2 4 160
2 5 185
2 6 195
2 7 200
b. Which input is variable? Fixed? How do you know?
c. How many of the variable input should the firm use to maximize profits? Please verify. Note that in order to do this you need to use costs.
d. What are the max profits the firm can earn if it sells the Q for $5.50 at market?
e. Please graph both the total, average, and marginal product curves over the ranges of Q provided. Explain the shape of the curves and how the marginal curve is related to the total curve.