Chapter 5, Technical Question 1 and 5 in the textbook.

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Place all answers, both numerical and written, in a single excel spreadsheet.

Place each problem into a separate tab or sheet in an Excel file.

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If the question incorporates graphs, you must replicate the graph on your spreadsheet file.

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    The following table shows data for a simple production function.

 

Capital (K)      Labor (L)         Total                 Average             Marginal

Product (TP)        Product (AP)     Product (MP)

10                 0                  0                             —                          —

10                 1                  5

10                 2                 15

10                 3                 30

10                 4                 50

10                 5                 75

10                 6                  85

10                           7                           90

10                            8                            92

10                            9                            92

10                           10                           90

    From the information in the  table, calculate marginal and average products.
    Graph the three functions (put total product on one graph and marginal and average products on another).
    For what range of output does this function have diminishing marginal returns?
    At what output is average product maximized?

 

    The following table shows data for the simple production function used in Question 1. Capital costs this firm $20 per unit, and labor costs $10 per worker.

K          L        TP          TFC      TVC       TC      AFC    AVC    ATC     MC

10        0         0

10        1         5

10        2        15

10        3        30

10        4        50

10        5        75

10        6        85

10        7        90

10        8        92

 

    From the information in the table, calculate total fixed cost (TFC), total variable cost (TVC),total cost (TC), average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC).
    Graph your results, putting TFC, TVC, and TC on one graph and AFC, AVC, ATC, and MC on another.
    At what point is average total cost minimized?

 

At what point is average variable cost minimized?