Make sure to label every axis and curve, and make your graphs large enough to be read easily. If you are instructed to calculate, you must show your work to receive credit.

A firm uses one variable input, labor, and one fixed input, capital. Its short-run production function for the firm, which produces knowledgium, is shown below.

Quantity of Labor

0

1

2

3

4

5

6

Total Product

0

4

10

20

28

34

36

Production Review

(a) Calculate the marginal product of the third worker. Show your work.

(b) At what point, if at all, does the data show diminishing returns to labor? Explain.

Cost Review

(c) By the tenth unit of labor, is marginal product likely to be positive or negative? As a result, would marginal cost likely be high or low?

(d) Draw the firm's short-run average total cost curve (ATC), average fixed cost curve (AFC), average variable cost curve (AVC), and marginal cost curve (MC). (Base your graph on the traditional models for these curves, not actual cost values.)

(e) The rent for the knowledgium factory increases. Illustrate the effect of this change on your graph from part (d).

(f) The firm's total cost after the rent increase is $2,000, and its new total fixed cost is $1,600. It is producing 20 units of output. Calculate the firm's average variable cost. Show your work.

(g) The government imposes a per-unit tax on the production of knowledgium. Which of the seven cost curve(s) would be affected?