You have the following data collected on the production possibilities at your firm:

Total Output (Q)

Workers Employed (L)

Machines (K) [0] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10]

[0] 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

[1] 0.00 12.00 15.83 18.62 20.89 22.84 24.57 26.13 27.57 28.90 30.14

[2] 0.00 18.19 24.00 28.23 31.67 34.62 37.24 39.61 41.79 43.80 45.69

[3] 0.00 23.20 30.61 36.00 40.39 44.16 47.50 50.52 53.50 55.87 58.27

[4] 0.00 27.57 36.38 42.78 48.00 52.48 56.45 60.04 63.34 66.39 69.25

[5] 0.00 31.52 41.59 48.91 54.88 60.00 64.54 68.64 72.41 75.90 79.17

[6] 0.00 35.16 46.40 54.57 61.22 66.94 72.00 76.58 80.78 84.68 88.32

[7] 0.00 38.57 50.89 59.85 67.15 73.42 78.98 84.00 88.61 92.88 96.88

[8] 0.00 41.79 55.14 64.85 72.75 79.55 85.86 91.01 96.00 100.63 104.96

[9] 0.00 44.85 59.18 69.59 78.08 85.37 91.83 97.67 103.03 108.00 112.65

[10] 0.00 47.77 63.04 74.14 83.18 90.94 97.82 104.04 109.75 115.05 120.00

a. Suppose you have to make production decisions over the next 6 months and the number of machines you currently have on hand is 8. Produce a table with the number of workers in the first column that shows the average and marginal products of labor under these conditions.

b. If your product is currently selling for $20 per unit add a column to the table for part a for the marginal revenue product of labor.

c. If you are a profit maximizer and the total cost per unit of labor employed is $120 per unit, how many units of labor will you employ and what will you earn in profits in the short run?

d. How would your answer to part c change if you had 5 machines to work with rather than 8? You must be specific and demonstrate how you reached your new conclusion.