In Problem 22-20, if the firm were to employ the 8th unit of labor and produce 380 units of output, what would be the average variable cost and the marginal cost?

Problem 22-20

Consider Figure 22-3. If the firm were to employ an 8th unit of labor, its total product would rise to 380 units of output. What would be the resulting values of the average product of labor and of the marginal product of labor?

Transcribed Image Text:

FIGURE 22-3 As the number of workers employed each week increases, the total number of units of cloud computing services produced each week rises, as shown in panels (a) and (b). In panel (c), marginal product (MP) first (1) Labor Input 0 1 2 @N 3 456 The Relationship between Output and Costs 7 (2) Total Product (units of cloud computing services per week) 0 50 110 180 240 290 330 360 (3) Average Product (units of services per week) (3) = (2) (1) - 50 55 60 60 58 55 51 Panel (a) (4) Marginal Product 50 60 70 60 50 40 30 rises and then falls. Average product (AP) follows. The near mirror image of panel (c) is shown in panel (d), in which MC and AVC first fall and then rise. (5) Average Variable Cost = (5) $1,000+ (3) $20.00 18.18 16.67 16.67 17.24 18.18 19.61 (6) Marginal Cost (6) $1,000 (4) $20.00 16.67 14.29 16.67 20.00 25.00 33.33