3) Suppose that Starbucks buys new coffee bean grinders. The following table shows the number of one-pound bags of coffee that can be ground each day for different quantities of labor.

a) Compute the average product of labor at each level of output.

b) Compute the marginal product of labor at each level of output.

QUANTITY OF LABOR (L) BAGS GROUND PER DAY (TP) AVERAGE PRODUCT OF LABOR (APL) MARGINAL PRODUCT OF LABOR (MPL)

0 0

1 35

2 65

3 85

4 100

5 110

4) The following table gives the marginal product that results from using 10 units of capital with varying levels of labor. Use this information to determine the average and marginal product of labor for every level of labor.

K L TP AP MP

10 0 0

10 1 60

10 2 150

10 3 260

10 4 385

10 5 520

10 6 663

10 7 812

10 8 965

10 9 1118

10 10 1268

5) The following table indicates the total product that a firm can produce with 10 units of capital and varying levels of labor. Each unit of capital costs $10 and each unit of labor costs $10. Use this information to determine the short-term costs of the firm.

K L TP TFC TVC TC AFC AVC ATC MC

10 0 0

10 5 20

10 10 39

10 15 55

10 20 70

10 25 84

10 30 97

10 35 109

10 40 119