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 20 50 1234567 90 120 140 150 155 (a) Fill in the column of marginal products. What pattern do you see? Why? = you see? (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 (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.

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 20 50 1234567 90 120 140 150 155 (a) Fill in the column of marginal products. What pattern do you see? Why? = you see? (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 (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.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 32CTQ: How does fixed cost affect marginal cost? Why is this relationship important?

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Question

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.

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Step 2: Fill the column of the marginal product and comment on the visible pattern

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Step 3: Fill the column of the total cost

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Step 4: Fill the column of the average cost and comment on the visible pattern

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Step 5: Fill the column of the marginal cost and comment on the visible pattern

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Step 6: Compare the marginal product with the marginal cost and explain

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Step 7: Compare the ATC with the marginal cost and explain

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