Rina's Performance Pizza is a small restaurant in Denver that sells gluten-free pizzas. Rina's very tiny kitchen has barely enough room for the three ovens in which her workers bake the pizzas. Rina signed a lease obligating her to pay the rent for the three ovens for the next year. Because of this, and because Rina's kitchen cannot fit more than three ovens, Rina cannot change the number of ovens she uses in her production of pizzas in the short run.
However, Rina's decision regarding how many workers to use can vary from week to week because her workers tend to be students. Each Monday, Rina lets them know how many workers she needs for each day of the week. In the short run, these workers are inputs, and the ovens are inputs.
Rina's daily production schedule is presented in the following table.
Fill in the blanks to complete the Marginal Product of Labor column for each worker.

On the following graph, plot Rina's production function using the green points (triangle symbol).
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

Suppose that labor is Rina's only variable cost and that she has a fixed cost of $20 per day and pays each of her workers $30 per day.
Use the orange points (square symbol) to plot Rina's total cost curve on the following graph using the quantities from the preceding table.

The law of diminishing marginal product of labor is demonstrated by which of the following? (Pick the correct answers/answer below)
Total output declines as you increase the quantity of labor.
Total output increases only when you increase both labor and ovens.
Total output increases at a decreasing rate as you increase the quantity of labor?

Transcribed Image Text:

Output Marginal Product of Labor Number of Workers (Pizzas) (Pizzas) 0 0 60 2 100 130 4 150 5 160 200 180 160 140 S 120 100 80 Production Funcion 260 40 20 LABOR HIRED (Number of workers) 100 t 182 2 1O0 100 12 340 101 QUANTITY OF OUTPUT