LeBron Factory
Number
of
Workers
Number
of
Machines
Output
(chairs
produced
per hour)
Marginal
Product of
Labor
Cost of
Workers
Cost of
Machines
Total
Cost
?1
?2
?5
?2
?2
?10
?3
?2
?20
?4
?2
?35
?5
?2
?55
?6
?2
?70
?7
?2
?80
Refer to Table above. First, complete the missing information in the Table above.
1.Each worker at the LeBron Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 70 chairs per hour and operates 8 hours per day, what is the factoryâs total labor cost per day?
a.
$72
b.
$112
c.
$576
d.
$616
2.Each worker at the LBJ Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?
a.
$480
b.
$576
c.
$520
d.
$616
3.Each worker at the LBJ Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. Assume the number of machines does not change. If the factory produces at a rate of 78 chairs per hour, what is the total machine cost per day?
a.
$20
b.
$40
c.
$240
d.
We are unable to determine total machine costs from the information given.
4.Each worker at the LBJ Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per hour, what is the total labor cost per hour?
a.
$40
b.
$48
c.
$384
d.
$424
5.Assume LBJ Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?
a.
5 chairs per hour
b.
15 chairs per hour
c.
25 chairs per hour
d.
70 chairs per hour
6.Assume LBJ Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?
a.
5 chairs per hour
b.
10 chairs per hour
c.
20 chairs per hour
d.
25 chairs per hour
7.Chair Factory experiences diminishing marginal product of labor with the addition of which worker?
a.
the third worker
b.
the fourth worker
c.
the fifth worker
d.
the sixth worker
Chico Samu Ocean and Fifi, the most popular couple in CU have a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
First, complete the missing information in the table below.
Output
(Instructional
Modules
per Month)
Fixed
Costs
Variable
Costs
Total
Cost
Average
Fixed
Cost
Average
Variable
Cost
Average
Total
Cost
Marginal
Cost
0
$1,080
1
$1,080
$ 400
$1,480
$400
2
$965
$450
3
$1,350
$2,430
4
$1,900
$475
5
$2,500
$216
6
$4,280
$700
7
$4,100
8
$5,400
$135
9
$7,300
10
$10,880
$980
8.What is the marginal cost of creating the tenth instructional module in a given month?
a.
$900
b.
$1,250
c.
$2,500
d.
$3,060
9. What is the average variable cost for the month if 6 instructional modules are produced?
a.
$180.00
b.
$533.33
c.
$700.00
d.
$713.33
10.What is the average fixed cost for the month if 9 instructional modules are produced?
a.
$108.00
b.
$120.00
c.
$150.00
d.
$811.11
11.How many instructional modules are produced when marginal cost is $1,300?
a.
4
b.
5
c.
7
d.
8
12.One month, Teacher's Helper produced 18 instructional modules. What was the average fixed cost for that month?
a.
$60
b.
$108
c.
$811
d.
It can't be determined from the information given.
Figure 1 below
In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms.
13. If there are 500 identical firms in this market, what is the value of Q1?
a.
10,000
b.
20,000
c.
50,000
d.
150,000
14.If there are 500 identical firms in this market, what is the value of Q2?
a.
12,000
b.
60,000
c.
240,000
d.
300,000
15.If there are 700 identical firms in this market, what is the value of Q1?
a.
140,000
b.
210,000
c.
280,000
d.
420,000
16.If there are 700 identical firms in this market, what is the value of Q2?
a.
140,000
b.
210,000
c.
280,000
d.
420,000
17.A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its
a.
opportunity costs.
b.
fixed costs.
c.
variable costs.
d.
total costs.
18.A firm will shut down in the short run if, for all positive levels of output,
a.
its losses exceed its fixed costs.
b.
its total revenue is less than its variable costs.
c.
the price of its product is less than its average variable cost.
d.
All of the above are correct.
19.A firm's marginal cost has a minimum value of $2, its average variable cost has a minimum value of $4, and its average total cost has a minimum value of $5. Then the firm will shut down if the price of its product is less than
a.
$5 but more than $2.
b.
$5.
c.
$4.
d.
There is not enough information given to answer the question.
20.A firm's marginal cost has a minimum value of $50, its average variable cost has a minimum value of $80, and its average total cost has a minimum value of $90. Then the firm will shut down once the price of its product falls below
a.
b.
c.
d.
$90.
$80
$50
$40
LeBron Factory
| Number of Workers | Number of Machines | Output (chairs produced per hour) | Marginal Product of Labor | Cost of Workers | Cost of Machines | Total Cost |
| ?1 | ?2 | ?5 | ||||
| ?2 | ?2 | ?10 | ||||
| ?3 | ?2 | ?20 | ||||
| ?4 | ?2 | ?35 | ||||
| ?5 | ?2 | ?55 | ||||
| ?6 | ?2 | ?70 | ||||
| ?7 | ?2 | ?80 |
Refer to Table above. First, complete the missing information in the Table above.
1.Each worker at the LeBron Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 70 chairs per hour and operates 8 hours per day, what is the factoryâs total labor cost per day?
| a. | $72 |
| b. | $112 |
| c. | $576 |
| d. | $616 |
2.Each worker at the LBJ Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?
| a. | $480 |
| b. | $576 |
| c. | $520 |
| d. | $616 |
3.Each worker at the LBJ Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. Assume the number of machines does not change. If the factory produces at a rate of 78 chairs per hour, what is the total machine cost per day?
| a. | $20 |
| b. | $40 |
| c. | $240 |
| d. | We are unable to determine total machine costs from the information given. |
4.Each worker at the LBJ Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per hour, what is the total labor cost per hour?
| a. | $40 |
| b. | $48 |
| c. | $384 |
| d. | $424 |
5.Assume LBJ Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?
| a. | 5 chairs per hour |
| b. | 15 chairs per hour |
| c. | 25 chairs per hour |
| d. | 70 chairs per hour |
6.Assume LBJ Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?
| a. | 5 chairs per hour | |
| b. | 10 chairs per hour | |
| c. | 20 chairs per hour | |
| d. | 25 chairs per hour |
7.Chair Factory experiences diminishing marginal product of labor with the addition of which worker?
| a. | the third worker |
| b. | the fourth worker |
| c. | the fifth worker |
| d. | the sixth worker |
Chico Samu Ocean and Fifi, the most popular couple in CU have a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
First, complete the missing information in the table below.
| Output (Instructional Modules per Month) | Fixed Costs | Variable Costs | Total Cost | Average Fixed Cost | Average Variable Cost | Average Total Cost | Marginal Cost |
| 0 | $1,080 | ||||||
| 1 | $1,080 | $ 400 | $1,480 | $400 | |||
| 2 | $965 | $450 | |||||
| 3 | $1,350 | $2,430 | |||||
| 4 | $1,900 | $475 | |||||
| 5 | $2,500 | $216 | |||||
| 6 | $4,280 | $700 | |||||
| 7 | $4,100 | ||||||
| 8 | $5,400 | $135 | |||||
| 9 | $7,300 | ||||||
| 10 | $10,880 | $980 |
8.What is the marginal cost of creating the tenth instructional module in a given month?
| a. | $900 |
| b. | $1,250 |
| c. | $2,500 |
| d. | $3,060 |
9. What is the average variable cost for the month if 6 instructional modules are produced?
| a. | $180.00 |
| b. | $533.33 |
| c. | $700.00 |
| d. | $713.33 |
10.What is the average fixed cost for the month if 9 instructional modules are produced?
| a. | $108.00 |
| b. | $120.00 |
| c. | $150.00 |
| d. | $811.11 |
11.How many instructional modules are produced when marginal cost is $1,300?
| a. | 4 |
| b. | 5 |
| c. | 7 |
| d. | 8 |
12.One month, Teacher's Helper produced 18 instructional modules. What was the average fixed cost for that month?
| a. | $60 |
| b. | $108 |
| c. | $811 |
| d. | It can't be determined from the information given. |
Figure 1 below
In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms.
13. If there are 500 identical firms in this market, what is the value of Q1?
| a. | 10,000 |
| b. | 20,000 |
| c. | 50,000 |
| d. | 150,000 |
14.If there are 500 identical firms in this market, what is the value of Q2?
| a. | 12,000 |
| b. | 60,000 |
| c. | 240,000 |
| d. | 300,000 |
15.If there are 700 identical firms in this market, what is the value of Q1?
| a. | 140,000 |
| b. | 210,000 |
| c. | 280,000 |
| d. | 420,000 |
16.If there are 700 identical firms in this market, what is the value of Q2?
| a. | 140,000 |
| b. | 210,000 |
| c. | 280,000 |
| d. | 420,000 |
17.A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its
| a. | opportunity costs. |
| b. | fixed costs. |
| c. | variable costs. |
| d. | total costs. |
18.A firm will shut down in the short run if, for all positive levels of output,
| a. | its losses exceed its fixed costs. |
| b. | its total revenue is less than its variable costs. |
| c. | the price of its product is less than its average variable cost. |
| d. | All of the above are correct. |
19.A firm's marginal cost has a minimum value of $2, its average variable cost has a minimum value of $4, and its average total cost has a minimum value of $5. Then the firm will shut down if the price of its product is less than
| a. | $5 but more than $2. |
| b. | $5. |
| c. | $4. |
| d. | There is not enough information given to answer the question. |
20.A firm's marginal cost has a minimum value of $50, its average variable cost has a minimum value of $80, and its average total cost has a minimum value of $90. Then the firm will shut down once the price of its product falls below
| a. b. c. d. | $90. $80 $50 $40 |
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Related textbook solutions
Related questions
Below is a table showing the production numbers for a chair factory (where the production numbers are based on chairs being produced per day).
|
Workers |
Total Product (TP) |
Average Product (AP) |
Marginal Product (MP) |
Marginal Revenue Product (MRP) |
|
0 |
0 |
- |
- |
- |
|
1 |
10 |
|
|
|
|
2 |
|
15 |
|
|
|
3 |
|
|
40 |
|
|
4 |
|
35 |
|
|
|
5 |
190 |
|
|
|
|
6 |
|
|
30 |
|
|
7 |
240 |
|
|
|
|
8 |
250 |
|
|
|
|
9 |
|
|
5 |
|
a) Fill in the missing numbers for the TP, AP and MP columns (round to the nearest chair)
b) In one sentence explain what the AP of 4 workers being 35 tells us.
c) In one sentence explain what your answer for MP of the 4th worker tells us.
d) Given the fact that each chair produced in our factory can be sold at the market price of $10 per chair, fill in the MRP column (round to the nearest dollar).
e) In one sentence explain what your answer for MRP for the 4th worker tells us.
f) If the market wage for workers doing manufacturing work (such as chair production) is $180 per day, determine the number of workers this firm should hire to maximize its profit.
Explain your answer using MRP.
Below is a table showing the production numbers for a chair factory (where the production numbers are based on chairs being produced per day).
|
Workers |
Total Product (TP) |
Average Product (AP) |
Marginal Product (MP) |
Marginal Revenue Product (MRP) |
|
0 |
0 |
- |
- |
- |
|
1 |
10 |
|
|
|
|
2 |
|
15 |
|
|
|
3 |
|
|
40 |
|
|
4 |
|
35 |
|
|
|
5 |
190 |
|
|
|
|
6 |
|
|
30 |
|
|
7 |
240 |
|
|
|
|
8 |
250 |
|
|
|
|
9 |
|
|
5 |
|
a) Fill in the missing numbers for the TP, AP, and MP columns (round to the nearest chair)
b) In one sentence explain what the AP of 4 workers being 35 tells us.
c) In one sentence explain what your answer for MP of the 4th worker tells us.
d) Given the fact that each chair produced in our factory can be sold at the market price of $10 per chair, fill in the MRP column (round to the nearest dollar).
e) In one sentence explain what your answer for MRP for the 4th worker tells us.
f) If the market wage for workers doing manufacturing work (such as chair production) is $180 per day, determine the amount of workers this firm should hire to maximize its profit.
Explain your answer using MRP.
