Answer to Question #275612 in Microeconomics for Ray

Question

Assume that a firm has a plant of fixed size and that it can vary its output only by varying the amount of labor it employs. The table below shows the relationships between the amount of labor employed, the output of the firm, the marginal product of labor and the average product of labor

Answer 1

a)See table above.

b)Divide the increase in total labor cost by the increase in total output to get marginal cost.

c)Divide total labor cost by total output to get average variable cost.

d)As marginal product rises to a maximum, marginal cost falls to its minimum. As marginal product falls from its maximum, marginal cost rises from itsminimum.

e)As average product rises to its maximum, average variable cost falls to its minimum. As average product falls from its maximum, average variable cost rises from its minimum.