rea Mowry is a knitwear designer, and she has a firm DreaReneeKnits. She uses knitters as labour and only uses one variable cost – yarn – and one fixed cost – the price of knitting needles. She pays R100 for a knitter, R50 for yarn and R100 for knitting needles. Use this information to complete the table values askes and questions below.
Andrea Mowry is a knitwear designer, and she has a firm DreaReneeKnits. She uses knitters
as labour and only uses one variable cost – yarn – and one fixed cost – the price of knitting
needles. She pays R100 for a knitter, R50 for yarn and R100 for knitting needles. Use this
information to complete the table values askes and questions below.
| LABOUR | TP | MP | AP | TFC | TVC | TC | ATC | MC |
| 0 | 0 | - | - | 100 | 0 | 100 | - | - |
| 1 | 2 | 2 | 2 | 100 | 150 | 250 | 125 | 150 |
| 2 | 5 | (a) | 2.5 | 100 | 300 | (d) | (e) | 66.67 |
| 3 | 9 | 4 | 3 | 100 | 450 | 550 | 61.11 | (f) |
| 4 | 12 | 3 | (b) | 100 | (c) | 700 | 58.33 | 50 |
| 5 | 15 | 2 | 2.8 | 100 | 750 | 850 | 60.71 | 75 |
a. Complete values a-f.
b. Using to the law of diminishing returns, place the concepts in order in which they
reach their turning points: average product, total product, marginal product.
c. In the example above, at what value does
their turning point?
d. Beyond the turning point in
average variable cost.
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