Question

mbus, Inc., makes brooms and then sells them door-to-door. Here is the relationship between the number of workers and Nimbus’s output in a given day:

In the following table, complete the marginal product column.

WORKERS	OUTPUT	MARGINAL PRODUCT	TOTAL COST	MARGINAL COST 3.33/ 5.00/ 15.00/ OR 100.00	AVERAGE TOTAL COST 3.33/ 5.00/15.00 OR 100.00
0	0		$
1	20		$
2	50		$
3	90		$
4	120		$
5	140		$
6	150		$
7	155		$

A worker costs $100 a day, and the firm has fixed costs of $200. Use this information to fill in the column for total cost in the previous table.

Fill in the column for marginal cost in the previous table. (Hint: MC=?TC?QMC=?TC?Q.)

Fill in the column for average total cost in the previous table. (Hint: ATC=TCQATC=TCQ.)

Which of the following statements are true about the patterns found in this table? Check all that apply.

Average total cost is not U-shaped.

When marginal product is rising, marginal cost is falling.

When marginal cost is less than average total cost, average total cost is rising.

Marginal cost declines at first, then rises.

Answer 1

WORKERS	OUTPUT	MARGINAL PRODUCT	TOTAL COST	MARGINAL COST 3.33/ 5.00/ 15.00/ OR 100.00	AVERAGE TOTAL COST 3.33/ 5.00/15.00 OR 100.00
0	0		200
1	20	20	300	100	15.0
2	50	30	400	100	8.0
3	90	40	500	100	5.6
4	120	30	600	100	5.0
5	140	20	700	100	5.0
6	150	10	800	100	5.3
7	155	5	900	100	5.8

The average cost is not exactly U shaped but that of a rectangular hyperbola, Thereason is the falling ATC. The ATC is continuously falling with an increase in output.