Solution to Problem Set 05 (ECO100)

Solution to Problem Set 05 (ECO100) - Prof. Gustavo Indart...

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Prof. Gustavo Indart Department of Economics University of Toronto ECO 100Y INTRODUCTION TO ECONOMICS Solution to Problem Set 5 1. a) b) Q L 0 1 2 3 4 5 6 7 8 9 Q 0 25 75 140 195 235 260 270 270 260 AP L --- 25 37.5 46.7 48.7 47 43.3 38.6 33.7 28.7 MP L --- 25 50 65 55 40 25 10 0 -10 Q 275 250 225 200 175 150 125 100 75 50 25 0 0 1 2 3 4 5 6 7 8 9 10 Q L
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c) AP MP 75 50 40 30 20 AP 10 0 0 1 2 3 4 5 6 7 8 9 10 Q L - 1 0 M P (i) the maximum marginal product of labour is 65 and occurs at 2 < Q L < 3 (ii) the maximum average product of labour is 48.7 and occurs at L = 3 (iii) zero marginal product of labour occurs at 7 < Q L < 8 (iv) the MP L immediately before the onset of eventually diminishing returns is 50 and occurs at 1 < Q L < 2 (v) MP L = AP L occurs at around Q L = 4. 2. a) Output FC VC TC AFC AVC AC MC 0 16 0 16 --- --- --- --- 1 16 8 24 16 8 24 8 2 16 14 30 8 7 15 6 3 16 18 34 5.3 6 11.3 4 4 16 20 36 4 5 9 2 5 16 22 38 3.2 4.5 7.6 2 6 16 27 43 2.7 4.5 7.2 5 7 16 33 49 2.3 4.7
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This note was uploaded on 01/16/2011 for the course ECO ECO100 taught by Professor Inheart during the Fall '09 term at University of Toronto- Toronto.

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Solution to Problem Set 05 (ECO100) - Prof. Gustavo Indart...

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