8) Use the following information on a hypothetical short-run production function to answer questions a-c. Units of Labor/Day Units of Output/Day 5 8 6 7 120 140 155 165 9 168 The price of labor is $20 per day. Ten units of capital are used each day, regardless of output level. The price of capital is $50 per unit. a. Calculate the marginal and average variable product of each unit of labor input. b. Calculate total, average total, average variable, and marginal costs. c. Can you tell where diminishing marginal returns sets in?

8) Use the following information on a hypothetical short-run production function to answer questions a-c. Units of Labor/Day Units of Output/Day 5 8 6 7 120 140 155 165 9 168 The price of labor is $20 per day. Ten units of capital are used each day, regardless of output level. The price of capital is $50 per unit. a. Calculate the marginal and average variable product of each unit of labor input. b. Calculate total, average total, average variable, and marginal costs. c. Can you tell where diminishing marginal returns sets in?

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 12RQ: What is a production function?

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