Fill in the missing parts in the following tables to illustrate the behavior of production and costs in the short-run; then determine the optimal level of production according to the number of inputs you are intending to use.
|
Output Units |
Land Square Meters |
Capital Egyptian Pounds |
Labor Units |
|
0 |
|||
|
1000 |
|||
|
1600 |
|||
|
2100 |
|||
|
2500 |
|||
|
2600 |
|
Output |
FC |
VC |
TC |
MCL |
MPL |
|
AFC |
|
|
0 |
|
|
|
|
|
|
|
|
|
1000 |
|
|
|
|
|
|
|
|
|
1600 |
|
|
|
|
|
|
|
|
|
2100 |
|
|
|
|
|
|
|
|
|
2500 |
|
|
|
|
|
|
|
|
|
2600 |
|
|
|
|
|
|
|
|
- -Hint
- Consider land and capital as fixed factors, while labor units as variable factors.
- The cost of land is L.E20 per square meter.
- The interest rate on capital is 10%.
- The average wages per unit of labor is L.E1500.
Capital is a fixed factor. A fixed amount is assumed to be invested, the interest on which is 10%
Land is a fixed factor. A fixed sum is assumed to be spent irrespective of the output. The amount is assumed to be L.E 1,000 (since the area of land is not given).
The amount of interest is assumed to be L.E 1,000 (since the capital invested is not given).
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