Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 14, Problem 3SPPA
To determine
Based on the case study, construct the total variable cost and total cost schedule. Calculate the difference between total cost and total variable cost at each output level and what does it show?
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Peter's birdhouse factory rents equipment for
constructing birdhouses and hires students.
Peter pays $50 a day for equipment and $180 a day
to each student he hires.
The table shows Peter's total product schedule.
Calculate Peter's average fixed cost, average
variable cost, average total cost, and marginal cost
and complete the table.
>>> Answer to 2 decimal places.
Total
Labor product
(workers (houses
per day) per day)
1
45
2
3
99
162
Average Average Average
fixed variable total
cost
cost
cost
(dollars per house
Marginal
cost
(dollars
per
house)
Matt's birdhouse factory rents equipment for constructing birdhouses and hires students.
Matt pays $120 a day for equipment and $160 a day to each student he hires.
The two left columns of the table show Matt's total product schedule.
Calculate Matt's average fixed cost, average variable cost, average total cost, and marginal
cost and complete the table.
>>> Answer to 2 decimal places
Total Average Average Average
Labor product fixed variable total Marginal
cost
cost
cost
cost
(workers (houses
per day)
per day)
(dollars per house)
1
40
2
3
84
132
Complete the following table, assumingthat each unit of labor costs $75 per day. a. Graph the fixed cost, variable cost, and total cost curves for these data.b. What is the marginal product of the third unit of labor?c. What is average total cost when output is 18 units per day?
Chapter 14 Solutions
Foundations of Economics (8th Edition)
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