Assgn1 - than the cost of capital per unit of output. D)...

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Assignment 1 Chapter 15 1. Hours of labor cars washed average product of labor marginal product of labor 0 0 0 1 2 2 2 2 5 2.5 3 3 7 2.333 2 4 8 2 1 2. A) Marginal product of first unit of labor is 6. B) The marginal product of the 15 th unit of labor is 6. C) 1200 D) 600 E) No, because the law of diminishing marginal return state that the resulting increments of product decreases beyond some point and eventually the marginal product of the input diminishes. However, in this case the marginal product of labor does not decrease or diminish, it stayed the same. F) No, because even though the output rises, the average production of labor and marginal production of labor does not change at all. 3. A) Yes, because the unit of output when the marginal product of labor is 20 is lower than the cost of capital. B) If the firm was not minimizing costs, less labor should be used relative to capital because according to the law of marginal return, the marginal product of input eventually diminishes.
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Assignment 1 C) No, because if the marginal product of labor is 23, the unit of output would be higher
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Unformatted text preview: than the cost of capital per unit of output. D) Yes, because the marginal product of labor equals the marginal product of capital. The marginal product of the input is proportional to its price. Chapter 16 1. A) Output (presses per mo.) Total fixed cost ($) Total variable cost ($) Total cost ($) 1000 1000 1 1000 500 1500 2 1000 1000 2000 3 1000 2000 3000 4 1000 3500 4500 5 1000 5000 6000 B) Output Average fixed cost ($) Average variable cost ($) Average total cost 1 1000 500 1500 2 500 500 500 3 333.333 666.666 333.333 4 250 875 281.25 5 200 1000 240 Assignment 1 C) Output (Presses per mo.) Marginal cost ($) 0-1 500 1-2 500 2-3 1000 3-4 1500 4-5 1500 2A) $20,000 B) $500 C) $300 D) Yes. This occurs because of the law of diminishing marginal returns. Marginal cost tends to rise beyond some output level according to the law of diminishing marginal returns....
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Assgn1 - than the cost of capital per unit of output. D)...

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