QUESTION 3 (20 MARKS) Suppose you just graduated from King's and in your first job is an operations supervisor at Hettinger Inc., a company that makes fidget spinners. widgets. You manager has just asked you to do a cost and production report. Your assistant is usually responsible for this but did not finish it before leaving on vacation yesterday. All you have is the following incomplete table of production and costs and are not able to contact him. Fortunately, you have the following information on the cost of labour and capital that will help you complete the table and make recommendations to your manager. Labour cost per unit: $10 . Capital cost per unit: $50 . Also note that the fidget spinner industry can be assumed to have a market structure similar to that of perfect competition. Q K L MPL APL FC VC TC AFC AVC ATC MC 0 10 0 10 $1 10 12.5 $20 35 10 3 10 $40 $13.5 10 $550 $10 a) (11 marks) Fill in the missing information in the table using your knowledge of producer theory. Use a calculator if needed. Recall that: MPL = Marginal product of labour - [(change in total product)/(change in total labour)] APL = the average product of labour - [(total product)/(total labour)] AFC = average fixed cost = TFC/Q; AVC = average variable cost = TVC/Q; ATC = average total cost = TC/Q MC = marginal cost = [(change in total cost)/(change in output) NOV . . . W 14 " tvb) (5 marks) Suppose the market price of fidget spinners is $1. Using your answers to the part a), what level of production (Q*) would you recommend in the short run to your manager? Show your work to justify your answer below: Q* = c) (4 marks) Suppose that you expect the market price of fidget spinners to remain around $1 for the foreseeable future. Given the cost and production data above, should you be concerned about your long-run job prospects at Hettinger Inc.? Clearly explain your answer below: NOV W N P 14 . . . city