04 Jun Question Complete the following:
Question
Complete the following:
Chapter 5, Technical Questions 1, 3, and 5 in the textbook.
Chapter 6, Technical Question 3 in the textbook.
Chapter 6, Application Question 3 in the textbook.
Chapter 5
Technical Questions #1
(1.) The following table shows data for a simple production
function.
Capital (K) Labor (L) Total Product (TP) Average Product (AP) Marginal Product (MP)
10 0 0 — —
10 1 5
10 2 15
10 3 30
10 4 50
10 5 75
10 6 85
10 7 90
10 8 92
10 9 92
10 10 90
a. From the information in the table, calculate
marginal and average products.
b. Graph the three functions (put total product on
one graph and marginal and average products
on another).
c. For what range of output does this function
have diminishing marginal returns?
d. At what output is average product maximized?
(3.) Jim is considering quitting his job and using his
savings to start a small business. He expects that
his costs will consist of a lease on the building,
inventory, wages for two workers, electricity, and
insurance.
a. Identify which costs are explicit and which are
opportunity (implicit) costs.
b. Identify which costs are fixed and which are
variable.
(5.) The following table shows data for the simple
production function used in Question 1. Capital
costs this firm $20 per unit, and labor costs $10 per
worker.
K L TP TFC TVC TC AFC AVC ATC MC
10 0 0
10 1 5
10 2 15
10 3 30
10 4 50
10 5 75
10 6 85
10 7 90
10 8 92
a. From the information in the table, calculate
total fixed cost (TFC), total variable cost (TVC),
total cost (TC), average fixed cost (AFC),
average variable cost (AVC), average total cost
(ATC), and marginal cost (MC).
b. Graph your results, puttingTFC,TVC, andTC
on one graph andAFC,AVC, ATC, andMC on
another.
c. At what point is average total cost minimized?
At what point is average variable cost
minimized?
Chapter 6
Technical Questions #3
(3.)Industry studies often suggest that firms may have
long-run average cost curves that show some output
range over which there are economies of scale
and a wide range of output over which long-run
average cost is constant; finally, at very high output,
there are diseconomies of scale.
a. Draw a representative long-run average cost
curve, and indicate the minimum efficient scale.
b. Would you expect that firms in an industry like
this would all produce about the same level of
output? Why?
Chapter 6
Application Questions #3
(3.) The following graph shows economies of scale in
the beer brewing industry.
$
SRAC
LRAC
0
1.5
Output (millions of barrels) 8.0
a. What does this graph tell us about the nature
of economies of scale in the beer brewing
industry?
b. What are the particular problems associated
with the firm represented by theSATC curve
shown in the graph? Does it represent a firm
that would be able to survive over time?
Hey skgoyal I tried to do the curve. I couldn’t get it.
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