Homework SourseNO SCREEN SHOTS OR IMAGES OF RESPONSE PLEASE TYPE YOUR ANSWE
NO SCREEN SHOTS OR IMAGES OF RESPONSE. PLEASE TYPE YOUR ANSWER OR UPLOAD DOCUMENT IF REQUIREMENTS MENTIONED ABOVE ARE NOT MET I WILL GIVE A NEGATIVE RATING
PART I (20 POINTS) A firm that Q = 400 Las K0.5 s office desks has the following production function in the short run hers Qthe quantity of chairs produced in a month L = the amount of labor (hours of work) used in a month K-the amount of capital building, machines, equipment) used. Assume that in the short run L = 1,000 and K = 100 1. What is the quantity produced ifL -1,000 and K 100? (5 points) 2. What is the quantity produced if L 1,200 and K 100? (5 points) 3. what is the quantity produced if L = 1,400 and K = 1007(5 points) 4. Does the law of diminishing marginal returns to labor apply to the production process? Why? Why not? (5 points) PART II (30 POINTS) A company has a cost structure described in the table below. Using your knowledge of the types of costs involved in a production process, fill in the blanks in the table QuantityTo produced Cost Total Fixed VariabTotal Cost Total AverageAveraAverage Marginal FixedVariable Cost Cost Cost Cost Cost 100 160 80 65 10 120 40 180 30 421 100Solution
part 1
Q =400L0.5K0.5
a. If L = 1000 and K= 100, then
Q = 400 ( 1000)0.5 (100)0.5
=400 (31.622)(10)
=126488
b. If L= 1200 And K =100
Q = 400 (1200)0.5(100)0.5
Q= 400( 34.641)(10)
=138564
C. If L= 1400 AND K = 100
Q = 400 (1400)0.5 (100)0.5
Q =400 ( 37.416)(10)
=149664.
D.Law of diminshing marginal returns say that as we increase one input again and again then the return from it declines with every additional unit.
This happens because, as we increase one input, we have to decrease the other one and a input alone cannot produce the product efficinetly as they are not perfect substitutes for each other.
Part 2
TOTAL COST
(TVC+TFC)
TOTAL FIXED COST
(TC-TVC)
TOTAL VARIALBLE COST
(TC-TFC)
AVERAGE TOTAL COST
(TC/Q)
AVERAGE FIXED COST
(TFC/Q)
AVERAGE VARIABLE COST
(TVC/Q)
MARGINAL COST
(TCN-TCN-1)
(TVCN-TVCN-1)
0
HOPE THIS HEPLS.
FEEL FREE TO COMMENT IN CASE OF QUERY.
| QUANTITY PRODUCED | TOTAL COST (TVC+TFC) | TOTAL FIXED COST (TC-TVC) | TOTAL VARIALBLE COST (TC-TFC) | AVERAGE TOTAL COST (TC/Q) | AVERAGE FIXED COST (TFC/Q) | AVERAGE VARIABLE COST (TVC/Q) | MARGINAL COST (TCN-TCN-1) (TVCN-TVCN-1) |
|---|---|---|---|---|---|---|---|
| 0 | 100 | 100 | 0 | NOT DEFINED | NOT DEFINED | NOT DEFINED | 0 |
| 1 | 160(ATC*Q) | 100 | 60(MC0+MC1) | 160 | 100(TFC1/Q) | 60 (TVC1/Q) | 60(TC1-TC0) |
| 2 | 180(TFC+TVC) | 100 | 80 | 90 | 50 | 40 (TVC2/Q) | 20 (TVC2-TVC1) |
| 3 | 195 (ATC*Q) | 100 | 95 | 65 | 33.33 | 31.66 | 15 |
| 4 | 205 | 100 | 105(TVC3+MC4) | 51.25 | 25 | 26.25 | 10 |
| 5 | 220 | 100 | 120 | 44 | 20 | 24 | 15 |
| 6 | 240(ATC*Q) | 100 | 140 | 40 | 16.66 | 23.33 | 20 |
| 7 | 280 | 100 | 180 | 40 | 14.28 | 25.71 | 40 |
| 8 | 340 | 100 | 240(AVC*Q) | 42.5 | 12.5 | 30 | 60 |
| 9 | 521 | 100 | 421 | 57.88 | 11.11 | 46.77 | 181 |
