In: Economics
The following table gives the total weekly output of bicycles at Al’s Bicycle Town.
Table 1
Labor |
Total Product (TP) |
Average Product of Labor (AP) |
Marginal Product of Labor (MP) |
0 |
0 |
n/a |
n/a |
1 |
100 |
100 |
100 |
2 |
300 |
||
3 |
450 |
||
4 |
110 |
||
5 |
630 |
||
6 |
110 |
Complete this table.
Draw the graphs of the marginal product (MP) and the average product (AP).
To learn how to plot the data in Excel, see https://www.youtube.com/watch?v=B3U9tDcoNeI
Where do the AP and MP curve cross?
The cost of 1 worker is $2000 per month. Total fixed cost is $4000 per month.
Complete Table 2 using your answers from Table 1 and by computing total variable cost (TVC) and total cost(TC).
Table 2
Labor |
Total Product (TP) |
Total Variable Cost (TVC) |
Total Cost (TC) |
0 |
0 |
n/a |
4000 |
1 |
100 |
2000 |
|
2 |
300 |
||
3 |
450 |
||
4 |
12000 |
||
5 |
630 |
||
6 |
12000 |
Draw the graphs of the TC and TVC curves. What is the relationship between these two curves?
Complete Table 3 by using your answers from the previous Tables and calculating the AVC, ATC, and MC.
Total Product (TP) |
Average Variable Cost (AVC) |
Average Total Cost (ATC) |
Marginal Cost (MC) |
0 |
n/a |
n/a |
n/a |
100 |
20 |
100 |
20 |
300 |
|||
450 |
|||
21.43 |
|||
630 |
|||
66.67 |
Draw the graphs of the ATC, AVC, and MC curves. What is the relationship between the ATC and AVC curves? Between the MC and AVC curves?