Question

Marco's Pizza is a small pizzeria. The firm's short-run production function is described in the table below. Assume that Marco's uses only two inputs to produce pizza: labor and capital (the oven). Marco's cost of labor is $400 per worker per week, and his cost of capital is $500 per week.

Labor (workers per week)	Output (pizzas per week)
1	74
2	152
3	228
4	296
5	350
6	384

In the scenario above, the marginal product of Marco's 3^rd worker is

pizzas.

In the scenario above, when Marco's produces 228 pizzas per week, the firm's average total cost is:

$

(Round your answer to 2 digits after the decimal point, e.g., 6.67)

In the scenario above, when the pizzeria increases its output from 228 to 296 pizzas, the marginal cost per pizza is:

$

(Round your answer to 2 digits after the decimal point, e.g., 5.70)

Answer 1

Marginal product of Marco's 3rd worker = (Total output of 3 workers- Total output of 2 workers)= (228-152)= 76 pizzas.

L	Q	TC=FC+wL	AC=TC/Q	MC=(Change in TC/Change in Q)
1	74	900	12.16	-
2	152	1300	(1300/152)=8.55	(1300-900)/(152-74)= 5.12
3	228	1700	7.45	5.26
4	296	2100	7.09	5.88
5	350	2500	7.14	7.41
6	384	2900	7.55	11.76

When Marco's produces 228 pizzas per week, the firm's average total cost is $7.45.

When the pizzeria increases its output from 228 to 296 pizzas , the marginal cost per pizza is $5.88 i.e increasing.