Use the Following Information on a Hypothetical Short-Run Production Function

question 69

Essay

Use the following information on a hypothetical short-run production function to answer questions a-c.

The price of labor is $20 per day.Ten units of capital are used each day,regardless of output level.The price of capital is $50 per unit.
a.Calculate the marginal and average variable product of each unit of labor input.
b.Calculate total,average total,average variable,and marginal costs.
c.Can you tell where diminishing marginal returns sets in?

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Definitions:

-ase

A suffix used in biochemistry to denote enzymes, which are proteins that catalyze biochemical reactions.

Crine

Pertaining to secretion, used in terms to describe glands or substances involved in the release of chemical substances in the body.

Gen

A prefix meaning "to become," often used in the formation of words related to genes, genetics, or generating something.

Ectasis

A medical term that describes the widening or enlargement of a hollow organ or structure.