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In: Economics

The following table gives the total weekly output of bicycles at Al’s Bicycle Town. Table 1...

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?

Solutions

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