2. (Module 55) Use the information in the table below to answer the following questions. Average Fixed Cost Average Total Cost Average Variable Marginal Quantity Cost Cost $ 20.00 $ 40.00 $ 20.00 $ 60.00 $ 39.00 $ 36.67 $ 40.00 $ 46.00 $ 53.33 $ 60.00 1 2$ 20.00 $ $ 23.33 $ 30.00 19.00 $ 18.00 3 $ 13.33 2$ 32.00 4 $ 10.00 2$ 50.00 2$ $ 70.00 $ 90.00 $ 100.00 5 8.00 $38.00 $ 46.67 $ 54.29 2$ 6.67 7 2$ 5.71 a. What is the firm's total fixed cost? b. Looking at the average total cost data, at what level of output does the diminishing returns effect begin to dominate the spreading effect? Explain. c. Suppose the firm's only variable input is labor. Using the data in the table, respond to the following. i. At what level of output would the firm's average product of labor (APL) be maximized? Explain how you know. ii. What level of output corresponds to where the firm's production function begins to rise at a diminishing rate?

2. (Module 55) Use the information in the table below to answer the following questions. Average Fixed Cost Average Total Cost Average Variable Marginal Quantity Cost Cost $ 20.00 $ 40.00 $ 20.00 $ 60.00 $ 39.00 $ 36.67 $ 40.00 $ 46.00 $ 53.33 $ 60.00 1 2$ 20.00 $ $ 23.33 $ 30.00 19.00 $ 18.00 3 $ 13.33 2$ 32.00 4 $ 10.00 2$ 50.00 2$ $ 70.00 $ 90.00 $ 100.00 5 8.00 $38.00 $ 46.67 $ 54.29 2$ 6.67 7 2$ 5.71 a. What is the firm's total fixed cost? b. Looking at the average total cost data, at what level of output does the diminishing returns effect begin to dominate the spreading effect? Explain. c. Suppose the firm's only variable input is labor. Using the data in the table, respond to the following. i. At what level of output would the firm's average product of labor (APL) be maximized? Explain how you know. ii. What level of output corresponds to where the firm's production function begins to rise at a diminishing rate?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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