Question

Using the data on trucks and labor below, calculate the average amount of labor per unit output for each level of output and the additional amount of labor required for each additional unit of output (hint: change in labor/change in output). Assume the unit price of labor is $10. Construct the average variable cost curve and the marginal cost curve.

#Truck	#Labor	Total output	Average product of Labor	Marginal product of labor
2	0	0	-	-
2	1	75	75	75
2	2	200	100	125
2	3	300	100	100
2	4	380	95	80
2	5	430	86	50
2	6	450	75	20

Answer 1

L	Total output, Q	Total variable cost, TVC = wL = 10L	Average variable cost = TVC/Q	Marginal cost = Change in TVC/Change in Q = 10/Change in Q
0	0	10*0 = 0	-	-
1	75	10*1 = 10	10/75 = 0.13	(10-0)/(75-0) = 10/75 = 0.13
2	200	10*2 = 20	20/200 = 0.1	(20-10)/(200-75) = 10/125 = 0.08
3	300	10*3 = 30	30/300 = 0.1	(30-20)/(300-200) = 10/100 = 0.1
4	380	10*4 = 40	40/380 = 0.11	10/(380-300) = 10/80 = 0.125
5	430	10*5 = 50	50/430 = 0.12	10/(430-380) = 10/50 = 0.2
6	450	10*6 = 60	60/450 = 0.13	10/(450-430) = 10/20 = 0.5