1.Business is booming at the local McDonald's restaurant. It is contemplating adding a new grill and french-fry machine, but the day supervisor suggests simply hiring more workers. How should the manager decide which alternative to pursue?
a.Compare the cost of the new grill and french-fry machine to the cost of additional workers. (which one is cheaper?)
b.Compare the additional output of the new grill and french-fry machine to the additional output of more workers.(which one produces more?)
c.Compare the additional output per dollar spent on the new grill and french-fry machine to the additional output per dollar spent on additional workers.
d.None of the above
2.Suppose a firm finds that the marginal product of capital is 60 and the marginal product of labor is 20. If the price of capital is $6 and the price of labor is $2.50.Should this firm adjust its mix of capital and labor?How?(i.e., more/less capital?more/less labor?)
3.A firm minimizes its costs by using inputs such that the marginal product of labor is 10 and the marginal product of capital is 20. The price of capital is $10 per unit. What must the price of labor be?
4.Suppose that the price of labor is $10 per unit and the price of capital is $20 per unit.
a.Assuming the firm is minimizing its cost, if the marginal product of labor is 50, what must the marginal product of capital be?
b.Suppose the price of capital increases to $25 per unit, while the price of labor stays the same. To minimize the cost of producing the same level of output, would the firm become more capital-intensive (i.e., more capital/less labor) or more labor-intensive?
5.
a.Suppose that the average age of students in your economics class is 23.7 years. If a new 19-year-old student enrolls in the class, will the average age in the class rise or fall?
b.Suppose that the average output per worker is 23.7 units.If a new worker produces 19 units,
i.is the marginal product of labor higher or lower than the average product?
ii.Will the average output per worker (average product) rise or fall when you hire the new worker?
6.
a.Barry Bond's career home run average in his first 15 years in major league baseball (through 1997) was 33 home runs per season. In 2001, he hit 73 home runs.What effect did his performance in 2001 have on his career home run average?
b.Suppose that you have 15 workers, and the average output per worker (average product) is 33.The 16th worker will produce 73 more units.Will the average product rise or fall if you hire the 16th worker?
7.The table below shows how the number of university classrooms cleaned in an evening varies with the number of janitors:
1. Business is booming at the local McDonald's restaurant. It is contemplating adding a new grill and french-fry machine, but the day supervisor suggests simply hiring more workers. How should the manager decide which altemative to pursue?+ a. Compare the cost of the new grill and french-fry machine to the cost of additional workers. (which one is cheaper?)- b. Compare the additional output of the new grill and french-fry machine to the additional output of more workers. (which one produces more?)+ c. Compare the additional output per dollarspent on the new grill and french-fry machine to the additional output per dollar spent on additional workers.+ d. None of the above 2. Suppose a firm finds that the marginal product of capital is 60 and the marginal product oflabor is 20. If the price of capitalis $6 and the price oflabor is $2.50. Should this firm adjust its mix of capital andlabor? How? (i.e., more/less capital? more lesslabor?)+ 3. A firm minimizes its costs by using inputs such that the marginal product oflaboris 10 and the marginal product of capitalis 20. The price of capitalis $10 per unit. What must the price of laborbe?+ Suppose that the price of labor is $10 per unit and the price of capital is $20 per unit.+ a. Assuming the firm is minimizing its cost, if the marginal product of labor is 50, what must the marginal product of capital be?+ + b. Suppose the price of capital increases to $25 per unit, while the price of labor stays the same. To minimize the cost of producing the same level of output, would the firm become more capital-intensive (i.e., more capital/less labor) or more labor-intensive? 5 Suppose that the average age of students in your economics class is 23.7 years. If a new 19-year-old student enrolls in the class, will the average age in the class rise or fall?+ b. Suppose that the average output per worker is 23.7 units. If a new worker produces 19 units,+ i. is the marginal product of labor higher or lower than the average product? ii. Will the average output per worker (average product) rise or fall when you hire the new worker?+ 6 a. Barry Bond's career home run average in his first 15 years in majorleague baseball (through 1997) was 33 home runs per season. In 2001, he hit 73 home runs. What effect did his performance in 2001 have on his career home run average?+ + b. Suppose that you have 15 workers, and the average output per worker (average product) is 33. The 16th worker will produce 73 more units. Will the average product rise or fall if you hire the 16th worker?+7. The table below shows how the number of university classrooms cleaned in an evening varies with the number of janitors:+ Janitors per evening Classrooms cleaned per evening Marginal Product - Slope| Average Variable Cost +7 a. What is the marginal product of the second janitor?+ + b. What is the average product of four janitors?+ c. Is the addition of the third janitor associated with increasing, diminishing, or negative marginal returns?+ d. Is the addition of the fourth janitor associated with increasing, diminishing, or negative marginal returns?+ e. Is the addition of the seventh janitor associated with increasing, diminishing, or negative marginal returns? + f. Calculate the slope of the total product curve as each janitoris added.+ 8. To convert this information on the productivity per work to costs per unit, + a. If each janitor costs $100/day, what is the marginal cost per classroom cleaned? + (note: this doesn't work for 6 or 7 janitors, because in this textbook example, it isn't possible to clean more than 17 classrooms per evening)+ b. What is the variable cost (in total) associated with the number of janitors hired?+ c. What is the average variable cost per classroom cleaned?+ Helpful Formulas: Average X = X /Q Example: AVC = VC /Q. Marginal Cost = change in Cost / change in Q.+9. The table below shows the total cost of cleaning classrooms. This is a continuation of the problem above. Use the numbers from the table above if you need them. + Helpful Formulas: TC =FC + VC. Fixed Costs are our costs if we produce 0.+ Average X = X /Q Example: AVC =VC /Q. We don't have average costs at 0 (can't divide by 0)+ Marginal X = change in X /change in Q. We don't have marginal costs at 0. + (We didn't increase from anything to get to zero, so it wouldn't make sense.) + Note: Marginal Total Cost is the same thing as Marginal Variable Cost (fixed costs don't change, so variable costs are the only thing changing). We only have 1 marginal cost.+ Classrooms cleaned per evening+ 3+7 7+ 12+ 16+7 17+ TC+ Total cost+ $10047 $20047 $30047 $400+ $5004 $6004 ATC+ Average Total Cost+ FC+ Fixed Cost+ AFC+ Average Fixed Cost+ VC+ Variable Cost+ AVC+ Average Variable Cost+ MC+ Marginal Cost+ +7 a. What is the average fixed cost of cleaning three classrooms?+ b. What is the average variable cost of cleaning three classrooms?+ c. What is the average fixed cost of cleaning seven classrooms?+ d. What is the average variable cost of cleaning seven classrooms?+ e. What is the marginal cost of cleaning the seventeenth classroom?+ f. What is the average total cost of cleaning twelve classrooms?+SRATC Plant Size 1+ Cost+ SRATC Plant Slac 2+ SRATC Plant Size 3+ $20m. 518m.I 516m. 514m. 1 510m. I 58m.I 56m. 54m. 52m. 1 2 3 4 5 6 7 8 9+ Number of Ships Per Year 10. If the firm wants to produce an average of 3 ships per year in the long run, which plant size .. should be chosen?.. A Plant Size 1., B. Plant Size 2., C. Plant Size 3.. D. More information is needed to answer this question..Cost+ SRATC Plant Size 1+ SRATC Plant Size 24 SRATC Plant Size 3+ $20m+ $18m+ $16m+ $14m+ $10m+ 58m+ 56m+ 54m+ 52m+ 0 2 3 4 5 6 7 8 9+ Number of Ships Per YearJanitors per evening 0 H 2 3 4 6 7 Classrooms cleaned per evening 0 3 7 12 16 17 17 16 Marginal Product = Slope Marginal Cost Variable Cost Average Variable Cost
