Question

Question:

1. Based on the table, answer the following questions.

(1)	(2)	(3)	(4)	(5)	(6)	(7)
K	L	Q	MPK	APK	APL	VMPK
0	20	0	-	-	-	-
1	20	50				100
2	20	150				200
3	20	300				300
4	20	400				200
5	20	450				100
6	20	475				50
7	20	475				0
8	20	450				-50
9	20	400				-100
10	20	300				-200
11	20	150				-300

A firm’s product sells for $4 per unit in a highly competitive market. The firm produces output using capital (which is rent at $25 per hour) and labor (which is paid a wage of $30 per hour under a contract for 20 hour of labor service).

a. Complete the table above and draw the ^diagrams.

b. What is the variable cost of producing 475 units of output

Answer 1