A2-6. Suppose the output (q) produced by different amounts of labour (L) hired by a rm is given below: (a) (b) (c) (d) (e) L 0 1 2 3 4 5 6 Q 0 3 9 18 24 27 28 Calculate and graph the marginal product curve for labour levels from 1 to 6. Does the rm experience increasing marginal product? decreasing marginal product? [4] Assume the rm has xed costs equal to $192 and that each unit of labour costs $36. For each of the 7 possible output levels calculate xed cost (FC), variable cost (VC), and total cost (TC). Show your full calculations for the output level q =24. Graph the FC, VC, and TC curves. [6] At each of the possible (positive) output levels calculate average variable cost (A VC), average total cost (A TC), and marginal cost (MC). Show your ll calculations for the output level q =24. In a new diagram, graph these values. [Hintsz (i) If X additional units cost Y additional dollars, then the appropriate MC number is Y/X. (ii) MC numbers are traditionally plotted halfway between output levels since they apply to the move between these two levels (they are not a measurement at a level). In this case, because the gaps between output levels are uneven, this procedure would be complicated, so just graph MC at the \"end\" output level] [5] Suppose this rm operates in a perfectly competitive market where the market price is $4.00 per unit of output. How many units will the rm produce? What if the market price is $12.00? What if the market price is 36.00? [5] Assume that the short-run cost curves are drawn for the long-run efcient plant size and that all rms in the industry are identical. Are any of the market prices from part (d) a long-run equilibrium price? Explain. [5] ATC: 336+ 24.= 14 ( TC/ Output) MC: (24-18) = marginal ATC= 36 36 -6 output Graph Values A2- - labour Output TRQ4 MR TR@12 MR| TR@ 36 MR. O 9 mo 9 N O M O O 36 3k 108 324 36 72 216 648 36 258 864 36 27 108 324 28 336 S a72 36 10 08 136 In perfectly comp. market - Price = MC At 48 - 18 Units At 128 7 27 Units At 36$ -28 Units At = 2.9