Consider a competitive, price-taking firm that employs only one variable input, labor, to produce a product that sells for $14 per unit. The wage rate is $24 per unit of labor and total fixed costs are $500. Fill in the blanks in each column of this table as instructed by the questions below: a-Compute marginal and average revenue products and fill in the blanks in columns 4 and 6. The sixth unit of labor __________________ (increases, decreases) _______________ (total, marginal) revenue by $__________. Decreasing labor usage from three to two units _______________ (increases, decreases) _______________ (total, marginal) revenue by $___________. b-Compute marginal cost and fill in the blanks in column 7. At first, marginal cost ___________ (rises, falls) as marginal product rises, then marginal cost _____________ (rises, falls) as marginal product falls.
Consider a competitive,
a-Compute marginal and average revenue products and fill in the blanks in
columns 4 and 6. The sixth unit of labor __________________ (increases,
decreases) _______________ (total, marginal) revenue by $__________.
Decreasing labor usage from three to two units _______________ (increases,
decreases) _______________ (total, marginal) revenue by $___________.
b-Compute marginal cost and fill in the blanks in column 7. At first, marginal
cost ___________ (rises, falls) as marginal product rises, then marginal cost
_____________ (rises, falls) as marginal product falls.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps