Nimbus, Inc., makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Nimbus' output during a given day. I have completed the first two rows. Workers Output Marginal Total Average Marginal Product Cost Total Cost Cost $200 --- --- --- 1 20 20 $300 $15 $5 50 30 $400 $8 $3.33 90 4 120 140 150 7 155 Fill in the column of marginal products. What pattern do you see? How might you explain it? Hint: incorporate Diminishing Marginal Product.

Question 2. Using below information to fill in the table below. The table sets out Sue's Surfboards' total product schedule. Sue's Surfboards hires workers at $500 a week and its total fixed cost is $1,000 a week. Labor Output AP MPL TVC TFC TC 6 7 2 4 S 1 3 30 70 120 160 190 210 220 30 35 40 40 38 35 31,42 40 0 50 40 30 20 10 ATC AFC AVC MC

2. Nimbus, Inc., makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Nimbus's output during a given day: Workers Output Marginal Product. Total Cost Average Total Cost Marginal Cost 0 0 1 20 2 50 3 90 4 120 5 140 150 7 155 (a) Fill in the column of marginal products. What pattern do you see? Why? (b) The firm's only variable cost is labor. A worker costs $100 a day, and the firm has other fixed costs of $200. Use this information to fill in the column for total cost. (c) Fill in the average total cost column (HINT: ATC TC/Q). What pattern do you see? (d) Now fill the marginal cost column (HINT: MC = ATC/AQ). What pattern do you see? (e) Compare the column for marginal product with the column for marginal cost. Explain the relationship. (f) Compare the column for average total cost with the column for marginal cost. Explain the relationship.

Production costs of books are presented in the table below. Labor Quantity Fixed Cost Variable Cost Total Cost MarginalCost AverageTotal Cost 0 0 $80 $0 $80     1 10 $80 $30 $110     2 26 $80 $60 $140     3 46 $80 $90 $170     4 65 $80 $120 $200     5 78 $80 $150 $230     Using the table above, find out the marginal cost of the 46th book produced, in dollars.

Question 5 Please calculate the cost table below: Output Total Fixed Costs Variable Costs Total Costs Average Fixed Costs Average Variable Costs Average Total Costs Marginal Costs $500 $200 $500 $500 $500 $500 $500 1 2 3 4 5 6 $500 $450 $800 $875 $925

9

Explain Law of Diminishing Marginal Returns using the following example. The weekly number of repairs produced by a computer repair shop depends upon numberof workers.No of Workers No of Repairs1   02   83   204   355   456   527   578   60

....

TOTAL AND MARGINAL PRODUCT Total Product [Output] 70 60 50 40 30 20 10 0 Marginal Product 20 10 0 -10 -20 1 Labor Input 1 2 2 2 3 3 4 5 5 6 6 7 7 8 Labor Input 8 Reset Labor Input 8 EEPRODUCTIVITY CALCULATIONS Labor Input 0 Output 0 Marginal Product structions: Move the slider at the bottom of the diagram to change the quantity of labor hired for both graphs and the table. ) What is the marginal product of the third worker? ) What is the marginal product of the fifth worker? c) If units of output are sold for $0.80 each, how much revenue does the firm gain by selling the additional units attributed to the 3rd worker? $ How much revenue does the firm gain by selling the additional output from the fifth worker? $

Mariel, Inc., makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Mariel's output during a given day:                                              Mariel, Inc. Workers Output Marginal Product Total Cost Average Total Cost Marginal Cost 0 0         1 20         2 50         3 90         4 120         5 140         6 150         7 155         a. Fill in the column of marginal products. b. A worker costs $100 a day, and the firm has fixed costs of $200. Use this information to fill in the column for the total cost. c. Fill in the column for the average total cost. d. Now fill in the column for marginal cost.