In the short run, a firm operates a factory which it leases for $2000 per annum. To increase output, the firm employs increasing amounts of labour at a wage rate of $500 per worker. The table below shows the relationship between the amount of labour employed and the amount of output produced in the factory. Labour Output (TPPP) APP MMP VC FC TC ATC MC 0 0 ____ ___ 0 _ _ 1 15 2 50 3 80 4 100 5 110 6 115 Using the information provided, calculate the following: APP MPP VC FC TC ATC MC a.Plot the APP and MPP curves on the same graph b.Plot the ATC and MC curves on the same graph c.With the aid of a diagram, explain the relationship between ‘marginal cost’ and ‘average total cost’ d.With the aid of a diagram, explain the relationship between ‘marginal cost curve’, ‘supply curve’ and the ‘average variable cost curve
In the short run, a firm operates a factory which it leases for $2000 per annum. To increase output, the firm employs increasing amounts of labour at a wage rate of $500 per worker. The table below shows the relationship between the amount of labour employed and the amount of output produced in the factory.
|
Labour |
Output (TPPP) |
APP |
MMP |
VC |
FC |
TC |
ATC |
MC |
|
0 |
0 |
____ |
___ |
0 |
_ |
_ |
||
|
1 |
15 |
|||||||
|
2 |
50 |
|||||||
|
3 |
80 |
|||||||
|
4 |
100 |
|||||||
|
5 |
110 |
|||||||
|
6 |
115 |
- Using the information provided, calculate the following:
- APP
- MPP
- VC
- FC
- TC
- ATC
- MC
a.Plot the APP and MPP curves on the same graph
b.Plot the ATC and MC curves on the same graph
c.With the aid of a diagram, explain the relationship between ‘marginal cost’ and ‘
d.With the aid of a diagram, explain the relationship between ‘marginal cost curve’, ‘supply curve’ and the ‘
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