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Y6 please answer all parts written neatly please and thank you. A2-5. Imagine that a firm's output in the short run related to its labour
Y6
please answer all parts written neatly please and thank you.
A2-5. Imagine that a firm's output in the short run related to its labour input is as given below: L O 2 3 4 5 6 q O 3 9 18 24 27 28 (a) What is the marginal product for each successive unit of labour between 1 and 6? Graph these values and identify labour levels where the firm experiences increasing or decreasing marginal product. [5] (b) Assume the firm has fixed costs equal to $192 and that cach unit of labour costs $36. For each of the 7 possible output levels calculate fixed cost (FC), variable cost (FC), and total cost (TC). Show your full calculations for the output level q =24. Graph the FC, VC, and TC curves. [5] (c) For each of the possible (positive) output levels determine average variable cost (VC), average total cost (ATC), and marginal cost (MC). Show your full calculations for the output level q =24. In a new diagram, graph these values. [Hints: (i) To calculate MC - if X additional units cost Y dollars, then MC - Y/X. (ii) MC is usually plotted halfway between output levels since MC applies to the move between levels (not a measurement at a level). Here, because the gaps between q levels are uneven, this would be complicated - just graph MC at the "end" output level.] [5] (d) This firm operates in a perfectly competitive market. What is q when the market price is $4.00? $12.007 36.00? Assuming that the SR cost curves are drawn for the LR efficient plant size and that all firms are identical, is any of the market prices above a LR equilibrium price? Explain. [5]Step by Step Solution
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