Problem set 6 - 14:08 My P. Le EC 133 C Microeconomics...

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Unformatted text preview: 14:08 My P. Le EC 133 C Microeconomics Problem Set 6 - Part III Assume that the Waterville House of Pizza has a fixed cost associated with space and equipment of $100 per day. Each worker is paid $10 per hour and works for 8 hours per day. The production function for a given day is as follows: Quantity of Labor (Workers), Quantity of pizzas 0, 0 1, 12 2, 22 3, 30 4, 36 5, 40 a. What is the marginal product, MPL, of the first, second, third, fourth, and fifth workers? What principle explains why the marginal product per worker declines as the number of workers employed increases? L K Q VC FC TC AVC AFC ATC AM C MP L 100 100 100--------------- 1 100 12 80 100 180 6.7 1 2 100 22 160 100 260 8.0 3 3 100 30 240 100 340 6 4 100 36 320 100 420 5 5 100 40 400 100 500 3 6 45 108 1 b. Calculate variable and total cost for each level of employment. c. What is the marginal cost (MC) of producing each of the first 12 pizzas? The 13th c....
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This note was uploaded on 10/27/2011 for the course ECON 125 taught by Professor Diannelabert during the Spring '11 term at Hamilton College.

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Problem set 6 - 14:08 My P. Le EC 133 C Microeconomics...

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