Consider a firm in a perfectly competitive market, producing a good using two inputs, capital (K) and labor (L). The below table shows, in the short run when capital is fixed, the relationship between the number of workers, and the quantity of output produced.

number of workers	output
1	20
2	40
3	55
4	65
5	70

i) Given the information above, what is the marginal product of labor (MPL) when the firm has 3 workers? What is the MPL when the firm has 4 workers?

ii) Sketch the short-run production function for this firm. What is the slope of the production function? Why does it have this shape?

A firms total cost curve is given by the equation TC=1000+6Q

iii) What is the firm's fixed cost of production? What is the marginal cost of production?

Thomas is a utility maximizing consumer with well-behaved preferences over two goods, tea and cake. He has diminishing marginal utility in the consumption of both goods. These preferences can be represented in a utility function.

iv) The price of tea €1 and the price of the cake is €3. is Thomas has an income of €30. Write down the equation of his budget line and sketch it on a graph. What is the slope of his budget line?

v) The price of tea increases to €1.50. Explain with the aid of a diagram how this will affect the budget line. Will Thomas’s optimal choice of consumption bundle change?