Tony's Pizza's Production Function Is Shown in the Table Above

question 150

Essay

Tony's Pizza's production function is shown in the table above. Tony currently operates Plant 1. He hires workers at a wage rate of $50 a day and his total fixed cost is $100.
a) Calculate Tony's Pizza's total variable cost and total cost for each output level.
b) Calculate Tony's marginal costs.
c) Calculate the average fixed costs, average variable costs, and average total costs.
d) Draw Tony's marginal, average variable, and average total cost curves in one figure. What is the relationship between marginal cost and average cost?

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Definitions:

Competitiveness

The ability of an individual or organization to compete in the market effectively, often by offering superior products, services, or conditions.

Productivity

The measure of efficiency of a person, machine, factory, or system in converting inputs into useful outputs.

Turnover

The rate at which employees leave a workforce and are replaced by new personnel.

Absenteeism

The habitual non-presence of an employee at their job, which can be due to various reasons, including illness, personal issues, or dissatisfaction with the work environment.