Intermediate Price Theory (ECO 3101) Second Problem Set (There are five (5) worksheets to this assignment) Learning Objectives Upon completion of this problem set, students performing up to expectaion will be able to: 1. calculate measures and identify key points of a firm's short-run production function use a firm's long-run production function to calculate marginal rate of technical substitution and identify returns to scale 3. analyze elements of, and changes in, a firm's short-run total cost . determine the cost-minimizing combination of inputs for a firm in the long run 5. analyze the profit-maximizing behavior of a firm operating in a perfectly competitive market. Short-Run Production The table below shows the daily production schedule of a firm that has one variable input, labor. Do the following: Part 1: Complete the table below (NOTE: Round average product to two decimal places). Part 2: Using the information in the table, answer the questions (a. through c.) below. Part 1: Short-Run Production Table Labor (Variable Average Marginal Input) Total Output Product Product 0 127 366 6 686 8 1055 10 1441 12 1814 14 2140 16 2390 18 2520 20 2530 22 2358 24 1981 26 1370 28 491 Part 2: 2a. Identify each stage of short-run production by specifying the range of the variable input (Labor) for each stage. NOTE: Make the initial value of each stage equal to the ending value of the previous stage (i.e. overlap stages). Stage I: Stage II: Stage III: 2b. At what level of the variable input (Labor) does the firm maximize (or exhaust) the benefits of specialization? Briefly explain, incorporating marginal product in your answer. 2c. What level of the variable input (Labor) maximizes production (ie. output)? Briefly explain, incorporating marginal product in your