Reference no: EM13851108

Instructions: Answer Q.1 and Q.2. Your answers should be precise and complete. Label the graphs clearly and show all your work.

 

1. Cool Skaters, Inc. makes skating board. The relationship between the number of workers and

Cool Skaters' output per week is given as follows:

Labor (workers per week)	Output (skating board per week)
0	0
1	40
2	100
3	140
4	170
5	190
6	200

a)   Draw the production function.

b)  Suppose a worker costs $100 per week and total fixed costs are $200 per week. Calculate Marginal Product, Total Cost, Total Fixed Cost, Total Variable Cost, Average Total Cost, Average Fixed Cost, Average Variable Cost, and Marginal Cost at each level of output and fill in the columns below. 

 

Labor	MP	TC	TFC	TVC	ATC	AFC	AVC	MC
0
1
2
3
4
5
6

 

c)   Draw the short-run average and marginal cost curves and state your observations on the relationship (i) between ATC and MC; and (ii) between ATC, AFC and AVC.

2.   Paulina sells beef in a competitive market where the price is $5 per pound. Her total revenue and total costs are given in the following table.

Quantity of Beef (lb)	Total Revenue ($)	Total Cost ($)	Profit ($)	Marginal Revenue ($)	Marginal Cost ($)	Marginal Profit ($)
0	0	4		-	-	-
1	5	6
2	10	9
3	15	14
4	20	22

a)   Fill out the table

b)  At what quantity does the marginal revenue equal marginal cost? What is price?