Item 9 The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,000. Fixed cost is $120,000. APMP
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- Graph the isoquant below and explain Labor (x) 50 38 28 20 14 10 8 7 Capital (y) 3 6 9 12 15 18 21 24Jill Pizza restaurant labor is 650 per worker, cost of oven is 800. The workers needed increases as the number of pizzas made increases. Using the information below: 1. Fill in the remaining columns given the calculations to calculate costs: variable (VC), Marginal (MC), Average Var.(AVC) Average Fixed (AFC) 2. Graph the MC, ATC, AVC, AFC curves (start from Quantity of 200 or your graphs look bad) 3. What is happening to your MC curve over time? Total Costs (TC), ATC (Average Total Costs),AFC (Average Fixed Costs), AVC(Average Variable Costs), MC (Marginal Costs) Workers Ovens 0 1 2 3 4 5 6 2 2 2 2 2 2 2 Q of pizzs 0 200 450 550 600 625 640 Fixed Cost of Ovens 800 800 800 800 800 800 800 Varriable Cost of Workers 0 650 Total Costs 0 ATC 0 AFC 0 AVC MC 0 0GM cuts jobs at its Australian manufacturing unit GM will cut 500 jobs, or about 12% of its workforce, at its Australian plant because of a sharp fall in demand for its locally-made "Cruze" small car. Source: The Wall Street Journal, April 8, 2013 As GM cuts its workforce, how will the marginal product and average product of a worker change in the short run? Suppose that before the cuts the marginal product of GM workers is below their average product. As the number of workers decreases, the marginal product of a GM worker and the average product of a GM worker in the short run. increases; decreases does not change; does not change decreases; decreases increases; increases decreases; increases
- Assuming the firm is minimizing its cost and the price of labour is $10 per unit and the price of capital is $20 per unit. the marginal product of labour is 50, what must the marginal product of capital be?. In the short run, labor is a hat-making firm’s only variable input. Wage rate is $5.00/hour. The firm currently employs a certain amount of labor H (hours), such that the marginal product of labor is 10 hats per worker-hour, and average product is 15 hats per worker-hour. MPL(H) = 10; APL(H) = 15. (Note: marginal and average products of labor for this firm are not constant. 10 and 15 are their values at a particular point, H, not everywhere.) What is the marginal cost of a hat for that firm?A small specialty cookie company, whose only variable input is labor, finds that the average worker can produce 100 cookies per day, the cost of the average worker is $32 per day, and the price of a cookie is $1.00. Is the firm maximizing profit? The firm A. is not maximizing profit because the marginal revenue product of labor is greater than the wage. B. is not maximizing profit because the marginal revenue product of labor is less than the wage. C. is maximizing profit because the marginal product of labor is greater than the wage. D. is not maximizing profit because the price of the output is not equal to the wage. E. is not maximizing profit because the marginal product of labor is greater than the wage.
- Macmillan Learning Consider the table, which reports production information for a firm that uses a fixed amount of capital and varying amounts of labor. Use this information to answer the questions. Do not round answers. What is the marginal product of the third worker? Third worker's marginal product: units What is the average product of the second worker? Round your answer to the nearest whole number. Second worker's average product: units What are diminishing marginal returns, and with which worker do they set in for this firm? Diminishing marginal returns occur in the short run when variable inputs are added to a fixed input, and marginal product declines. In this case, diminishing returns set in with the fourth worker. O Diminishing marginal returns occur in the short run when variable inputs are added to a fixed input, and product declines. In this case diminishing Workers 1 2 3 4 Output (total product) 23 27 33 37MC Qu. 41 If the variable cost curve is a straight... If the variable cost curve is a straight line, then the marginal cost curve will be horizontal. marginal cost curve is upward sloping. Omarginal cost curve will be U-shaped. Omarginal cost curve may be U-shaped.a) Fill in the empty cells in the table. You have been also given following additional info- Price = $ 10 Wage = $ 1500 Labor (L) Output (q) Marginal Product of Labor Value of the marginal product of labor: Wage Marginal profit 0 0 1 400 2 720 3 960 4 1020 b) When the company should stop hiring Workers. Explain
- Each of the following examples reflect some labour cost faced by an employer. Select all of those which are considered quasi-fixed labour costs. Select one or more: a. Harpreet spent $1,000 advertising a recent job opening b. Denise pays her entry-level employees an hourly wage of $20 c. John recently laid off five workers and gave them each $20,000 in severance pay d. Ahmed's sales employees earn an average annual commission of $50,000 e. Amanda spends $5,000 per year on supplemental health insurance for each of her employeesConsider a small business that makes pastries. The business has rented a building to be used as its factory and shop floor. The rent of the building is $2,000 per week. The rest of the firm's weekly costs are as follows: ●Income lost from alternative employment - $2,000 ●Explicit variable costs - $1,500 ●Implicit variable costs - $ 500 i. If the firm sells 1,000 pastries per week, at $6 per pastry, calculate the firm's weekly ●Accounting profit, and ●Economic profit ii. Based on your answer to part b. i. above, should the firm continue to operate? Why or why not? iii. Assume that the firm continues at the current output level of 1,000 pastries per week while the prices start to fall. The firm should consider 'shut-down' if the price falls below what dollar value? Explain using relevant calculations and concepts