Capital costs this company $20 per unit, and labor costs $10 per worker. K L TP TFC 10 0 0 10 1 5 10

Capital costs this company $20 per unit, and labor costs $10 per worker.   

   

K L TP TFC

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. Calculate TFC, TVC, TC, AFC, AVC, ATC and MC   

b. Graph your results, putting TFC, TVC and TC on one graphand AFC, AVC, ATC and MC on another.  

c. At what point is average total cost minimized?  At what point is average variable cost minimized?  

   

 TFC=total fixed cost   

TVC=total variable cost   

TC=total cost   

AFC=average fixed cost   

AVC=average variable cost   

ATC= average total cost   

MC=marginal cost   

The following table shows data for a simple function   

   

Capital (K) Labor (L) Total Product (TP)

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?  

 

 

 

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