Capital costs this company $20 per unit, and labor costs $10 per worker.
K L TP TFC
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
a. Calculate TFC, TVC, TC, AFC, AVC, ATC and MC
b. Graph your results, putting TFC, TVC and TC on one graphand AFC, AVC, ATC and MC on another.
c. At what point is average total cost minimized? At what point is average variable cost minimized?
TFC=total fixed cost
TVC=total variable cost
TC=total cost
AFC=average fixed cost
AVC=average variable cost
ATC= average total cost
MC=marginal cost
The following table shows data for a simple function
Capital (K) Labor (L) Total Product (TP)
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
a. From the information in the table, calculate marginal and average products
b. Graph the three functions (put total product on one graph and marginal and average products on another).
c. For what range of output does this function have diminishing marginal returns?
d. At what output is average product maximized?
