Question
Aneesha's Pizzas is a takeout-only pizza parlor servicing the college campus of Madison that specializes in vegan pizzas. Aneesha's small shop has barely enough room
Aneesha's Pizzas is a takeout-only pizza parlor servicing the college campus of Madison that specializes in vegan pizzas. Aneesha's small shop has barely enough room for customers to stand and wait, let alone the five pizza ovens necessary to keep up with the hungry student customers. Aneesha signed a lease renting both the five ovens and the storefront for the next year. Due to the terms of the lease and the building's size constraint, Aneesha is unable to change the store's number of pizza ovens in the short run.
However, Aneesha does face a decision regarding the number of employees to schedule on a weekly basis. Every Sunday, Aneesha contacts the staff to communicate the amount of workers needed on each day of the upcoming week. In the short run, the store employees arevariable inputs, and pizza ovens arefixed inputs.
The following table presents Aneesha's daily production schedule.
Fill in the blanks to complete the Marginal Product of Labor column for each worker.
Labor | Output | Marginal Product of Labor |
---|---|---|
(Number of workers) | (Pizzas) | (Pizzas) |
0 | 0 | |
1 | 60 | |
2 | 100 | |
3 | 130 | |
4 | 150 | |
5 | 160 | |
On the following graph, plot Aneesha's production function using the green points (triangle symbol).
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
Hint: Be sure to plot the first point at (0, 0).
Production Function012345200180160140120100806040200QUANTITY OF OUTPUT (Pizzas)LABOR (Number of workers)5, 160
Suppose that Aneesha's only variable cost is labor. Assume that Aneesha faces daily fixed costs of $20 and pays all workers the same daily wage of $30.
Use the orange points (square symbol) to plot Aneesha's total cost curve on the following graph using the quantities from the preceding table.
Total Cost020406080100120140160180200200180160140120100806040200TOTAL COST (Dollars)QUANTITY OF OUTPUT (Pizzas)
True or False: The shape of the production function reflects the law of increasing marginal returns.
True
False
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