2. Inputs and outputs Kevin's Performance Pizza is a small restaurant in Chicago that sells gluten-free pizzas. Kevin's very tiny kitchen has barely enough room for the two ovens in which his workers bake the pizzas. Kevin signed a lease obligating him to pay the rent for the two ovens for the next year. Because of this, and because Kevin's kitchen cannot fit more than two ovens, Kevin cannot change the number of ovens he uses in his production of pizzas in the short "un. 因 However, Kevin's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Kevin lets them know how many workers he needs for each day of the week. In the short run, these workers are inputs, and the ovens are inputs. Kevin's daily production schedule is presented in the following table. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Labor Output Marginal Product of Labor (Number of workers) (Pizzas) (Pizzas) 1. 150 2. 3. 220 230 On the following graph, plot Kevin's production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. MacBook Pro G Search or type URL -> 3. 4. 081 S. H. B. N 十 5 F. 25 QUANTITY OF OUTPUT (Pizzas) Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0). 250 225 Production Function 175 150 125 00 0 75 3 4. LABOR (Number of workers) Suppose that labor is Kevin's only variable cost and that he has a fixed cost of $15 per day and pays each of his workers $30 per day. Use the orange points (square symbol) to plot Kevin's total cost curve on the following graph using the quantities from the preceding table. MacBook Pro -> Search or type URL & 3. 9. 00 6

What is a production function?

What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?

A firm had sales revenue of 1 million last year. It spent 600,000 on labor, 150,000 on capital and 200,000 on materials. What was the firms accounting profit?

Compute the average total cost, average variable cost, and marginal cost of producing 50 and 72 haircuts. Draw the graph of line three curves between 60 and 72 haircuts.

How do we calculate each of the following: marginal cost, average total cost, and average variable cost?

How does fixed cost affect marginal cost? Why is this relationship important?

Return to Figure 7.7. What is the marginal gain in output from increasing the number of batters from 4 to 5 and from 5 to 6? Does it continue the pattern of diminishing marginal returns? Figure 7.7 How output Affects Total costs

How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?

Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?