Explain different market structures (pure competition, monopoly, monopolistic competition, oligopoly) and the implication of their characteristics on the efficient allocation of scarce resources as well as the potential for market failure and(course objective 4)Analyze production and costs of the firm

• Calculate marginal product and marginal cost for an hypothetical company.
• Explain increasing and decreasing marginal productivity by applying it to a chocolate company.

Always use the economic terms, diagrams and concepts we are learning this week to earn full credit.

1.

(A) Consider the numbers representing a small fancy chocolate company. Please copy or reproduce the table below, then fill in the table to confirm your understanding of Productivity and costs.

(B) Then, using those numbers explain increasing marginal productivity (using the chocolate company concept) and decreasing marginal productivity

(Please use the chocolate company hypothetical concept.Think about a small chocolate making company. There is melting the chocolate, forming the chocolate, selling the chocolate, marketing the chocolate and any other tasks you can think of - be creative! If you would like to use a different hypothetical company, but same numbers, something you are more familiar with - go for it - just let me know!)

(C) Please draw a simplified diagram of marginal productivity and marginal cost that shows their relationship.

Labor (number of workers)0123456Total product (number of chocolates)06251,3252,2002,6002,9003,100Marginal Product

(added amount from additional worker)

0625Fixed costs

(Given and same for all output levels)

$30$30$30$30$30$30$30Variable cost($50 * number of workers)($50*0 = $0)

$0

Total costs

(fixed costs + variable costs)

($30+0) = $30Average Total Cost

(Total cost / Quantity)

Marginal costs (change in total cost / change in output)NA(new total cost - previous total cost) / (New output - old output)

Tip: Marginal cost can be calculated using the formula provided in the box above.