Microeconomics: Cost of Production
posted by Anonymous .
Please help me with this question!
Heaven Sub, a subway shop, has the following marginal product curve points for its hourly product:
i) When labour increases from 2 to 3 workers, total product increases by _____ subs per hour.
ii) Assume that if there are no workers, Heaven Sub does not have any output. Find the points in order to plot the production function.
iii) Find the points to the average product curve at 1, 2, 3,4 or 5 workers.
iv) Marginal product and average product curves always intersect at the ________ of the _____ curve.
i) 13 because when I graphed the points, the third input or worker intersected at (3, 13)
ii) I don’t know how to find the production function because I only know the change in quantity of workers and subs per worker. I don’t know how to work backwards.
iii) The AP formula is AP = quantity/number of inputs. The change in quantity of workers and subs per worker are given, and not the original values. So, again, I don’t know how to do this question..
iv) max, AP according to my notes and I don't really understand the theory of it.
An Excel spreadsheet would be very helpful for these questions
I looks like you need to "plot" total production. You are given the marginal product from adding each worker. Just convert that into total production. The first .5 workers gives 13 units of production (Q). The next worker adds 17 units, for a total of 30. The next worker adds 15, for a total of 45. And so on.
iii) AP = q/inputs. At .5 inputs, AP = 13/.5 = 26, at 1.5 AP=30/1.5=20, and so on.
iv) Max AP, what is the maximum AP value you get?