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P5

1. The document contains tables showing the relationship between variable input (labor), output, and costs as the variable input is increased in increments while holding capital fixed. 2. Marginal product and average product of labor initially increase but eventually diminish as more labor is added. Marginal cost and average cost per unit also rise with additional units of labor. 3. Total cost increases at an increasing rate as variable costs rise faster than output with each additional unit of labor input.

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82 views36 pages

P5

1. The document contains tables showing the relationship between variable input (labor), output, and costs as the variable input is increased in increments while holding capital fixed. 2. Marginal product and average product of labor initially increase but eventually diminish as more labor is added. Marginal cost and average cost per unit also rise with additional units of labor. 3. Total cost increases at an increasing rate as variable costs rise faster than output with each additional unit of labor input.

Uploaded by

yelz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Fixed input Variable Change in Output Marginal Average

(Capital input Labor (Given) product of product of


Given) (Capital ∆2 Q Labor Labor
Given) ∆4/∆2 4/2

2 0 - 0 - -

2 1 76 76 76

2 2 248

2 3 492

2 4 784

2 5 1,100

2 6 1.416

2 7 1,708

2 8 1,952

2 9 2.124

2 10 2,200
1.

2.
K L Q FC VC TC
Fixed input Variable Out(put Fixed Cost Variable Total Cost
(Given). input 1,000x(1) Cost (4)X(5)
(Given) (Given) 400x(2)
2 0 0 2,000 0 2,000
2 1 76 2,000
2 2 248 2,000
2 3 492 2,000
2 4 784 2,000
2 5 1,100 2,000
2 6 1,416 2,000
2 7 1,708 2,000
2 8 1,952 2,000
2 9 2.124 2,000
2 10 2,200 2,000
QUANTITY TOTAL COST MARGINAL COST
1 100 0
2 350 350
3 530
4 670
5 770
6 850
7 950
8 1,100
9 1,280
10 1530
Q FC Fixed VC TC Total AFC AVC ATC
Output Cost Variable Cost Average Average Average
(Given) (Given) Cost (G) (2)+(3) Fixed Variable Total Cost
Cost Cost (4)/(1)
(2)/(1) (3)/(1)
0 2,000 0
76 2,000 400
248 2,000 800
492 2,000 1,200
784 2,000 1,600
1.100 2,000 2,000
1.416 2,000 2,400
1,708 2,000 2,800
1.952 2,000 3,200
2.142 2,000 3,600
2,200 2,000 4,000
Q (Given) ∆Q VC ∆VC TC ∆TC MC
∆(1) (Given) ∆(3) (Given) ∆TC (6)/(2) or
(4)/(2))
0 0 2,000
76 400 2,400
248 800 2,800
492 1,200 3,200
784 1,600 3,600
1,100 2,000 4,000
1,416 2,400 4,400
1,708 2.800 4,800
1,952 3,200 5,200
2,124 3,600 5,600
2,200 4,000 6,000

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