6. The relationship between marginal product and marginal cost Antonio's Burrito Stand is a small restaurant that sells burritos. For Antonio, stoves are a fixed input and workers are variable inputs. Assume that labor is Antonio's only variable cost. Antonio has a fixed cost of $50 per day and pays each of his workers $50 per day. Antonio's total product schedule and total cost at each level of labor are presented in the following table. Fill in the blanks to complete the Marginal Physical Product of Labor column for each worker and the Marginal Cost column at each level of labor. (Hint: Marginal cost is the change in total cost divided by the change in the quantity of output. You can calculate it here by dividing the increase in total cost from hiring one more worker by the marginal physical product from hiring one more worker.) Quantity of Labor Quantity of Output (Workers) (Burritos per day) 0 1 2 3 4 5 0 25 75 100 110 115 Marginal Physical Product of Labor (Burritos per day) 25 50 25 10 5 Total Cost (Dollars per day) $50 $100 $150 $200 $250 $300 Marginal Cost (Dollars per burrito) When hiring the first and second workers, Antonio's Burrito Stand faces diminishing marginal returns to labor. Over the range of workers for which the marginal product of labor is decreasing, Antonio's Burrito Stand faces increasing $50.00 $50.00 $50.00 $50.00 $50.00 marginal cost.
6. The relationship between marginal product and marginal cost Antonio's Burrito Stand is a small restaurant that sells burritos. For Antonio, stoves are a fixed input and workers are variable inputs. Assume that labor is Antonio's only variable cost. Antonio has a fixed cost of $50 per day and pays each of his workers $50 per day. Antonio's total product schedule and total cost at each level of labor are presented in the following table. Fill in the blanks to complete the Marginal Physical Product of Labor column for each worker and the Marginal Cost column at each level of labor. (Hint: Marginal cost is the change in total cost divided by the change in the quantity of output. You can calculate it here by dividing the increase in total cost from hiring one more worker by the marginal physical product from hiring one more worker.) Quantity of Labor Quantity of Output (Workers) (Burritos per day) 0 1 2 3 4 5 0 25 75 100 110 115 Marginal Physical Product of Labor (Burritos per day) 25 50 25 10 5 Total Cost (Dollars per day) $50 $100 $150 $200 $250 $300 Marginal Cost (Dollars per burrito) When hiring the first and second workers, Antonio's Burrito Stand faces diminishing marginal returns to labor. Over the range of workers for which the marginal product of labor is decreasing, Antonio's Burrito Stand faces increasing $50.00 $50.00 $50.00 $50.00 $50.00 marginal cost.
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 3.7P
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I need help to see if I am doing this correctly and not sure if that last two statements are correct.
Transcribed Image Text:6. The relationship between marginal product and marginal cost
Antonio's Burrito Stand is a small restaurant that sells burritos. For Antonio, stoves are a fixed input and workers are variable inputs. Assume that
labor is Antonio's only variable cost. Antonio has a fixed cost of $50 per day and pays each of his workers $50 per day.
Antonio's total product schedule and total cost at each level of labor are presented in the following table.
Fill in the blanks to complete the Marginal Physical Product of Labor column for each worker and the Marginal Cost column at each level of labor.
(Hint: Marginal cost is the change in total cost divided by the change in the quantity of output. You can calculate it here by dividing the increase in
total cost from hiring one more worker by the marginal physical product from hiring one more worker.)
Quantity of Labor
(Workers)
0
1
2
3
4
5
Quantity of Output
(Burritos per day)
0
25
75
100
110
115
Marginal Physical Product of Labor
(Burritos per day)
25
50
25
10
5
When hiring the first and second workers, Antonio's Burrito Stand faces diminishing
Total Cost
(Dollars per day)
$50
$100
$150
$200
$250
$300
Marginal Cost
(Dollars per burrito)
marginal returns to labor.
Over the range of workers for which the marginal product of labor is decreasing, Antonio's Burrito Stand faces increasing
$50.00
$50.00
$50.00
$50.00
$50.00
marginal cost.
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