Calculate marginal and average products

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Reference no: EM1371977

1. The following table shows information for a simple production function.

Capital(K) Labor(L) Total Product(TP) Average Product(AP) Marginal Product(MP)
Column 1 numbers = Capital ; Column 2 numbers = Labor; Column 3 numbers= Total Product
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 on separate graphs (Total production, Marginal Products and Average Products).
c. For what range of output does this function have diminishing marginal returns?
d. At what output is average product maximized?

2. Suppose the demand curve for a monopolist is QD= 500 - P, and the marginal revenue function is MR = 500 - 2Q. The monopolist has a constant marginal and average total cost of $50 per unit.
a. Find the monopolist's profit-maximizing output and price.
b. Calculate the monopolist's profit.
c. What is the Lerner Index for this industry?

 

Reference no: EM1371977

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