Marginal Product of Labor: It refers to the additional units of output, which is produced by employing an additional unit of labor in the current labor force. Here, is the change in quantity. is the change in labor. is the marginal product of labor. Marginal Cost (MC): It refers to the rate by which the total cost of the produced good changes when the production increases by a single unit. As the fixed cost is constant irrespective of production, so the marginal cost depends on the variable cost only in the short run. Marginal cost is calculated as follows: Here, is the marginal cost. is the change in total cost is the change in quantity. Fixed cost: It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of an increase or decrease in output. Marginal Cost: It refers to the additional cost from an additional unit of output. It is generally the additional variable cost. Here, MC is the marginal cost. is the change in total cost is the change in quantity. Average Total Cost : It is also referred as the cost of a single unit, it includes the overall cost, that is the variable cost as well as the fixed cost. A firm should always maintain the price of a product above the ATC, otherwise it will result in loss for the firm. The formula for ATC is:

Question

Want to see the full answer?

Answer 1

Question

Chapter 11, Problem 8P

To determine

Concept Introduction:

Marginal Product of Labor: It refers to the additional units of output, which is produced by employing an additional unit of labor in the current labor force.

Here,

is the change in quantity.

is the change in labor.

is the marginal product of labor.

Marginal Cost (MC): It refers to the rate by which the total cost of the produced good changes when the production increases by a single unit. As the fixed cost is constant irrespective of production, so the marginal cost depends on the variable cost only in the short run. Marginal cost is calculated as follows:

Here,

is the marginal cost.

is the change in total cost

is the change in quantity.

Fixed cost: It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of an increase or decrease in output.

Marginal Cost: It refers to the additional cost from an additional unit of output. It is generally the additional variable cost.

Here,

MC is the marginal cost.

is the change in total cost

is the change in quantity.

Average Total Cost: It is also referred as the cost of a single unit, it includes the overall cost, that is the variable cost as well as the fixed cost. A firm should always maintain the price of a product above the ATC, otherwise it will result in loss for the firm. The formula for ATC is:

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Where can I go to get my own wax supplies?

Problem 2. If the consumer preference can be represented by a CES function with δ = 0.5, i.e. u(x, y) = x0.5 + y0.5. Let the prices and income be (px, py, w). 1. Set up the Lagrangian expression.2. Take the first-order conditions.3. Substitute into budget constraint to derive the optimal consumption bundles.

1. A town relies on four different sources for its non-drinking water needs: dam water, reclaimed water, rain water, and desalinated water. The different sources carry different risks and costs. For instance, desalinated water is fully reliable due to abundant sea water, but it is more expensive than other options. Reclaimed water also has relatively lower risk than rain or dam water since a certain amount can be obtained, even during the dry. season, by the treatment of daily generated waste water. Using any of the four options requires an investment in that resource. The return on a particular water source is defined as the amount of water generated by the source per dollar of investment in it. The expected returns and standard deviations of those returns for the four water sources are described in the following table: Water resource Expected return St. Deviation Dam water 2.7481 0.2732 Reclaimed water 1.6005 0.0330 Rain water 0.5477 0.2865 Desalinated water 0.3277 0.0000 Higher…