4. Clean Sweep is a company that makes brooms and then sells them door-to-door. Here is the...

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4. Clean Sweep is a company that makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Clean Sweep’s output in a given day:

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a. Fill in the column of marginal product. What pattern do you see? How might you explain it?

b. A worker costs €100 a day, and the firm has fixed costs of €200. Use this information to fill in the column for total cost.

c. Fill in the column for average total cost. (Recall that ATC = TC/Q.) What pattern do you see?

d. Now fill in the column for marginal cost. (Recall that MC = ΔTC/ Q.) What pattern do you see?

e. Compare the column for marginal product and the column for marginal cost. Explain the relationship.

f. Compare the column for average total cost and the column for marginal cost. Explain the relationship.

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Business Economics

ISBN: 388402

2nd Edition

Authors: Mark P. Taylor, Andrew Ashwin, N. Gregory Mankiw

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