A firm uses Labour (L) and Capital (K) to produce commodity (Y). The quantities of the inputs and outputs are shown in the table below.L012345678910K9090909090909090909090Y0100250420560675760820860885900Assuming that the wage rate is Rs. 340/- and the rental rate on capital is Rs. 0.5/-, calculate the short run average variable cost, marginal cost, average fixed cost, average total cost, total variable cost, total fixed cost and total cost. Plot all these curves.

TC = rK + wL where r is the rental rate of capital, K, and w is the wage rate of labor, L. Since…

Answered: A firm uses Labour (L) and Capital (K)…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A firm uses Labour (L) and Capital (K) to produce commodity (Y). The quantities of the inputs and outputs are shown in the table below.

L	0	1	2	3	4	5	6	7	8	9	10
K	90	90	90	90	90	90	90	90	90	90	90
Y	0	100	250	420	560	675	760	820	860	885	900

Assuming that the wage rate is Rs. 340/- and the rental rate on capital is Rs. 0.5/-, calculate the short run average variable cost, marginal cost, average fixed cost, average total cost, total variable cost, total fixed cost and total cost. Plot all these curves.

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