Question

L	W	MP	TP	MC	TVC	TFC	TC
1	200		10
2	200	30
3	200		75				650
4	200	40
5	200		140

Please answer the next 7 questions based on the table presented above.

The TFC associated with 30 units of output is equal to ________ dollars.

The TVC of producing 4 units of output is equal to ___________ dollars.

MP is at a maximum when MC is equal to _______ dollars.

Diminishing returns sets in with the addition of the ________ worker.

The TFC associated with 40 units of output is equal to ___________ dollars.

Answer 1

We can show the above information in the following table:

L	W	MP	TP	MC	TVC = L*W	TFC	TC= TFC+TVC
1	200	0	10	0	200	50	250
2	200	30	40	200	400	50	450
3	200	35	75	200	600	50	650
4	200	40	115	200	800	50	850
5	200	25	140	200	1000	50	1050

From the above table it appears that TFC for all values of output or Total product (TP) is fixed at 50 dollars.

1. Therefore, TFC associated with 30 units of output is equal to 50 dollars

2. From the above table, we find that when TP or total output is 10 units, the TVC =200

Therefore, when total output is 4 units, the TVC = 200/10*4=80 dollars

3. MP is at maximum when MC is equal to 200 dollars.

4. Diminishing returns sets with the addition of the fourth worker.

5. The TFC associated with 40 units of output is equal to 50 dollars.