1.) Heart's Yogurt is a big shop that sells cups of frozen yogurt in a town. Heart owns three yogurt machines. Her other inputs are refrigerators, yogurt mix, sprinkle toppings, cups and workers. She estimates that her daily production function when she varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in table 1.

Workers Quantity of yogurt (cups)

0 0

2 110

4 200

6 270

8 300

10 320

12 330

a. What are the fixed inputs and variable inputs in the production of cups of yogurt?

b. Draw the total product curve. Put the quantity of labor on the horizontal axis and the quantity of yogurt on the vertical axis.

c. What is the marginal product of the first worker? The second worker? The third worker? Why does marginal product decline as the number of workers increases?

2.) The production function for Heart's Yogurt is given in Problem 1. She pays each of his workers P70 per day. The cost of his other variable inputs is P0.50 per cup of yogurt. His fixed cost is P100 per day.

a.Calculate variable and total cost for every level of output given in Problem 1.

b.Draw Marty's variable cost curve. On the same diagram, draw his total cost curve.

c.Calculate the marginal cost for each levels of output