Answer to Question #41333 in Microeconomics for arash

Question

A firm produces the following units of output, Q, by hiring a fixed quantity of capital, K, and labour, L, as follows:

Q TPL APL MPL
16 8 0.5
36 16 0.44 0.40
65 24 0.37 0.28
97 32 0.33 0.25
137 40 0.29 0.20
177 48 0.27 0.20
209 56 0.27 0.25
233 64 0.27 0.33
249 72 0.29 0.50
257 80 0.31 1

A: Assuming that the cost of capital is $1,000 and labour costs $10.00 per hour, determine the total variable cost, average variable cost and the marginal cost of the firm for the output levels given above.
B: Provide rough graphs of the TVC, AVC and MC curves and compare their behaviour with the product curves in part b. Be sure to label your axes correctly.

Answer 1

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