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Unformatted text preview: C '0.~. T h . total .&quot;&quot;,uct cu. Y Manuel's Performance Pizza is a small restaurant that sells low-carbohydrate pizzas in a health-conscious town. Manuel's very tiny kitchen barely has enough room for the two ovens In which his workers bake the pizzas. Manuel signed a lease obligating him to pay the rent for the two ovens for the next year. Because of this, and because Manuel's kitchen cannot fit more than two ovens, Manuel cannot change the number of ovens he uses in his production of pizzas in the short run. On the other hand, Manuel's workers tend to be students. Each Monday, Manuel lets them know how many hours he'll need them for that week. In the short run, these workers are variable&quot; inputs, and the ovens are fixed&quot; inputs. Explanation: A fixed input is an input whose quantity cannot be changed in the short run. Therefore, the ovens are fixed inputs. Workers are the variable inputs. Manuel can vary the number of workers he hires based on his production needs. Close A Manuel's production schedule is presented in the table below. Fill in the blanks to complete the Marginal Physical Product of Labor column for each worker. Explanation: Number of Workers o 1 2 3 4 5 Output (Pizzas per day) o 80 150 200 220 230 Marginal Physical Product of Labor (Pizzas per day) __ 80__ 1- 7 0 - - - 1 50 1 20 1 10 1 Close A The marginal physical product of labor is the change in quantity of pizza output when an additional worker is hired. For example, the first worker raises the output from 0 to 80 pizzas per day, so the marginal physical product of the first worker is 80 pizzas per day. When Manuel hires the second worker, output increases from 80 to 150 pizzas per day, so the marginal physical product of the second worker is 70 pizzas per day. The rest of the values can be calculated in a similar manner.- -- - umber of Workers o 1 2 3 4 5 Output (Pizzas per day) o 80 150 200 220 230 Marginal Physical Product of Labor (Pizzas per day) 80 70 50 20 10 On the graph below, plot Manuel's production function using the orange points (square symbol). Line segments will automatically connect the points. Plot these points from left to right on the graph. OUTPUT (Pizzas pcr day) 300 270 240 Production Func. &quot; Answer OUTPUT (Pizzas pcr day) 300 270 210 180 o o o 240 210 o o o 150 120 90 60 30 o o 180 150 120 90 60 o o QUANTITY OF LABOR (Number of workers) o o 2 3 4 5 ICI&quot;arAlll~ 30 o o 1 2 3 4 5 QUANTITY OF LABOR (Number of workers) Explanation: Close /\. When Manuel employs zero workers, total output is 0, so you should place a point at the coordinates (0, 0); when he employs one worker, total output is 80, so the next point is at (1, 80), and so on. The slope of the production function measures the change in output for each additional unit of labor input (the marginal physical product of labor). From the graph, you can see that the production function becomes flatter as the number of workers increases....
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This note was uploaded on 04/07/2011 for the course ECON 205 taught by Professor Williams,w during the Spring '08 term at Sonoma.
- Spring '08