Posted: December 21st, 2015

# Capital costs this company \$20 per unit, and labor costs \$10 per worker.

Capital costs this company \$20 per unit, and labor costs \$10 per worker.

K L TP TFC

10 0 0

10 1 5

10 2 15

10 3 30

10 4 50

10 5 75

10 6 85

10 7 90

10 8 92

1. Calculate TFC, TVC, TC, AFC, AVC, ATC and MC
2. Graph your results, putting TFC, TVC and TC on one graphand AFC, AVC, ATC and MC on another.
3. At what point is average total cost minimized?  At what point is average variable cost minimized?

TFC=total fixed cost

TVC=total variable cost

TC=total cost

AFC=average fixed cost

AVC=average variable cost

ATC= average total cost

MC=marginal cost

The following table shows data for a simple function

Capital (K) Labor (L) Total Product (TP)

10 0  0

10 1  5

10 2  15

10 3  30

10 4  50

10 5  75

10 6  85

10 7  90

10 8  92

10 9  92

10 10  90

1. From the information in the table, calculate marginal and average products

1. Graph the three functions (put total product on one graph and marginal and average products on another).

1. For what range of output does this function have diminishing marginal returns?

1. At what output is average product maximized?

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