Consider a pizza restaurant where ovens are a fixed input and workers are variable inputs. Assume labor is the only variable cost for the business. The pizza restaurant has a fixed cost of $100 per day and pays each worker $180 per day.

Fill in the blanks to complete the Marginal Physical Product of Labor column for each worker and the Marginal Cost column at each level of labor. (Hint: Marginal cost is the change in total cost divided by the change in the quantity of output. You can calculate it here by dividing the increase in total cost from hiring one more worker by the marginal physical product from hiring one more worker.)

Labor Quantity of Output Marginal Physical Product of Labor Total Cost Marginal Cost

(Workers) (Pizzas per day) (Pizzas per day) (Dollars per day) (Dollars per pizza)

0 0 100

1 20 280

2 50 460

3 90 640

4 150 820

5 200 1,000

6 230 1,180