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HW3_answersstudents - HW#3 Answer Key Economics 304K...

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HW #3 Answer Key Economics 304K: Principles of Microeconomics Prof. Meg Ledyard (25 Points total) Remember to type the homework except for charts and graphs. Question 1 (10 points): Suppose that you own a firm that hires workers to make balloons. You know the following relationship between the number of workers and output: # of Workers Total Output of Balloons in one hour 0 0 1 200 2 375 3 500 4 600 5 675 6 725 a. (2 points) Calculate the Marginal Product of labor for this firm. # of Workers Total Output of Balloons in one hour Marginal Product of Labor 0 0 1 200 200 2 375 175 3 500 125 4 600 100 5 675 75 6 725 50
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b. (3 points) Draw the production function for this firm. It does not have to be exactly to scale, but it should have the correct shape. Why does it have this shape? Output Inputs (Workers) It has this shape because of diminishing marginal product. c. (2 points) Suppose the balloon factory costs 500 to operate, and labor costs 50 per hour. Calculate the total cost for each of the above number of workers.
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