20. In the short run, your firm can vary only the amount of labor it employs. Labor can be hired for $5 per unit, and your firm’s fixed costs are $25. Your firm’s short-run production function is given in the table below:

a. Compute the marginal and average product of each worker. What shape does each take? When does the marginal product begin to fall? Average product?

b. Compute the total cost of producing each output level indicated in the table.

c. Compute the average total, average variable, and marginal cost at each level of output. When does marginal cost begin to rise? Average variable cost?

d. Is there a link between your answers to

(a) and (c)?

Transcribed Image Text:

Labor Marginal Product Average Average Average Product Total Input Output of Labor of Labor Cost Total Cost Variable Marginal Cost Cost 1 5 2 12 3 20 4 5 60 28 34 34 39 7 43 8 46 9 48