Problem Set 05 (ECO100)

# Problem Set 05 (ECO100) - Prof Gustavo Indart Department of...

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Prof. Gustavo Indart Department of Economics University of Toronto ECO 100Y INTRODUCTION TO ECONOMICS Problem Set 5 1. You are given the following production function relating the quantity of labour (Q L ) to the quantity of output (Q) of good X for fixed K. Q L 0 1 2 3 4 5 6 7 8 9 Q 0 25 75 140 195 235 260 270 270 260 a) Construct a table showing the average product of labour (AP L ) and the marginal product of labour (MP L ) for each unit of labour. b) Graph the short run production function, i.e., the total product of labour curve (TP). c) Graph the short-run marginal product and average product curve. What is the quantity of Labour that produces (i) the maximum marginal product of labour (ii) the maximum average product of labour (iii) zero marginal product of labour (iv) the MP L immediately before the onset of eventually diminishing returns (v) MP L = AP L 2. Answer the following questions: a) Complete the following table describing the cost situation for a firm producing X. Output

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Problem Set 05 (ECO100) - Prof Gustavo Indart Department of...

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