Question

Assume the following:

• Labour can be hired at $6.00 per hour
• Material costs are $0.10 per perogie
• Fixed costs are $10.00

1. Complete the table below.
2. Graph the AVC, ATC, and the MC on the top portion of the graph provided on the next page.
3. Graph the marginal product and average product on the bottom portion of the graph provided.

Units of Labour	Total Output per Hour	Marginal Product	Average Product	Total Fixed Costs	Total Variable Costs	Total Cost	AVC	ATC	MC
0	0	-----	----		----		----	----	----
1	30
2	80
3	240
4	280
5	300

Answer 1

(a)

Working notes:

(1) TVC = Labor cost + Material cost = 6L + 0.1Q

(2) TC = TFC + TFC

(3) MP = Change in Q / Change in L

(4) AP = Q/L

(5) AVC = TVC/Q

(6) ATC = TC/Q

(7) MC = Change in TC / Change in Q

L	Q	MP	AP	TFC	TVC	TC	AVC	ATC	MC
0	0			10	0	10
1	30	30	30	10	9	19	0.3	0.63	0.3
2	80	50	40	10	20	30	0.25	0.375	0.22
3	240	160	80	10	42	52	0.175	0.22	0.1375
4	280	40	70	10	52	62	0.19	0.22	0.25
5	300	20	60	10	60	70	0.2	0.23	0.4

(b)

(c)