Complete the following question from the McConnell & Brue (22^nd Edition) text.

Chapter 7 , 147 Problem #5

Complete the following three questions as well.

1. Suppose your current job pays you $90,000 a year.However, you are considering starting

your own company. Based upon your research, you estimate your first year total revenue to

be $3,200,000. There are however several costs of running the company during this first

year, such as the cost of materials which will equal $1,240,000, employees who will receive

in total $950,000, utilities which will cost $360,000, and rent that will be paid to the landlord

that equals $600,000. Based on this information, solve for both your accounting profit and

economic profit during this first year. Also, based upon these profit values, state whether

you are better off starting this company or staying in your current job.

1. The short-run production function for a manufacturer of DVD drives is as follows: Number of Workers (Quantity of Labor) Total Output of DVD Drives
2. 0
3. 12000
4. 30000
5. 45000
6. 56000
7. 65000
8. 60000

1. Calculate the average product (AP) at each quantity of labor.
2. Calculate the marginal product (MP) at each quantity of labor.
3. Which worker(s) are in the region of increasing marginal returns?
4. Which worker(s) are in the region of diminishing marginal returns?
5. Which worker(s) are in the region of negative marginal returns?
6. In the region of diminishing marginal returns, what is happening to the marginal cost values?

1. Using the following cost information, answer the three parts that follow below: (54 points)

Total Product Fixed Cost (TFC) Variable Cost (TVC)

0 $60 $ 0

1 $60 $ 45

2 $60 $ 85

3 $60 $120

4 $60 $150

5 $60 $185

6 $60 $225

7 $60 $270

8 $60 $320

9 $60 $390

10 $60 $465

a. At every total product (TP) level, solve for total cost (TC), average fixed cost (AFC),

average variable cost (AVC), average total cost (ATC), and marginal cost (MC). For the

total product of 0, you can only solve for TC.

1. Graph the TFC, TVC, and TC all on the same graph. Make sure to label the axes.
2. Graph the AFC, AVC, ATC, and MC all on the same graph. Make sure to label the axes.