3. Problems and Applications Q4 Nimbus, Inc., makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Nimbus's output day: In the following table, complete the marginal product column. Workers Output Marginal Product Total Cost Marginal Cost Average Total Cost $120 15 4.00 15 $180 12.00 25 2.40 2 40 $240 6.00 35 1.71 75 S300 4.00 45 1.33 4 120 $360 3.00 30 2.00 5. 150 $420 2.80 15 4.00 6 165 $480 2.91 12.00 7 170 $540 3.18 A worker costs $60 a day, and the firm has fixed costs of $120. Use this information to fill in the column for total cost in the previous table. Fill in the column for marginal cost in the previous table. (Hint: MC = Fill in the column for average total cost in the previous table. (Hint: ATC = " ) Which of the following statements are true about the patterns found in this table? Check all that apply. O Marginal cost declines at first, then rises. O Average total cost is not U-shaped. O when marginal product is rising, marginal cost is falling. O When marginal cost is less than average total cost, average total cost is rising.

Question 10 Figure 1 below shows the relationship between the number of mechanics hired and the number of car repairs performed per day at a car-repair shop. Number of Cars Repaired 0 2 4 5 Number of Mechanics The production process depicted on the graph exhibits marginal product of labor. O increasing O constant O diminishing 18 17 15 12 8 00

Construct the average fixed cost, average variable cost, and average total cost schedules and the marginal cost schedule.

3. We often work with production technologies that give rise to initially increasing marginal product of labor that eventually decreases. Are the following statements then True or False? Explain.The marginal product of labor is positive so long as the slope of the production frontier is positive.

b. The Yorkshire Cricket Company makes cricket bats out of lumber supplied to it by Acme Sporting Goods, which pays Yorkshire £10 for each finished bat. Yorkshire's only factors of production are lathe operators and a small building with a lathe. The number of bats per day it produces depends on the number of employee-hours per day, as shown in the table below. Number of bats per day 0 5 10 15 20 25 30 35 Number of employee-hours per day 0 1 2 4 7 11 16 22 (i) If the wage is £15 per hour and Yorkshire's daily fixed cost for the lathe and building is £60, what is the profit-maximising quantity of bats? (ii) What would be the profit-maximising number of bats if the firm's fixed cost were not £60 per day but only £30? (iii) How would Yorkshire's profit-maximising level of output be affected if the government imposed a tax of £10 per day on the company? (Hint: This tax independent from the production level.) (iv) What would Yorkshire's profit-maximising level of output be if the government…

Graph the following table.   Number of Workers Total Output 0 0 1 20 2 60 3 150 4 260 5 350 6 420 7 455 8 420 9 375 10 300   What is the marginal product and average product at each level of production? Graph marginal product and average product. Label the areas on the graph of increasing marginal productivity, diminishing marginal productivity, and diminishing absolute productivity.

Labor (workers) Output 0 20 50 70 80 85 OAN 345 0 The table above shows a total product schedule. Suppose that labor costs $20 per worker and fixed costs are $60. The total cost of producing 80 units equals O less than $5. O more than $5 and less than $110. O more than $110 and less than $120. O more than $120 and less than $150. DIS O more than $150.

In the following graph, the price of capital is $100 per unit; the price of labor is $25 per unit. How much does the seventh unit of output add to total cost? Units of capital 100 64 40 24 64 nothing $400 $800 $4,000 $8,000 C 144 120 160 Q-10 Q-20 280 Units of labor Q-30 400