Suppose that Maria is starting a food ordering and delivery company. Customers order meals online. Employees prepare the meals and deliver them to customers. Maintenance of the online platform for ordering meals costs the company $5 per day. The company also rents space where orders are prepared. Rent costs $50 per day. To make the deliveries, the business also rents two delivery cars that cost $10 each per day. The costs of ingredients for preparing different numbers of meals are provided in the table below. Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders. She will pay each employee $120 per day. The first two columns of the table below show how many meals different number of workers can prepare and deliver. $50 Price per meal Workers Meals (Labor L) (Output Q) 0 0 1 2 3 4 5 6 30 42 52 60 67 73 MPL FC Cost of ingredients $10 $75 $100 $121 $138 $152 $165 $177 $189 $199 $210 VC TC AFC AVC 7 79 8 85 9 90 10 95 a) Use Excel Charts to graph this business' production function (relationship between L and Q). Hint: Select the data that you would like to be included, and go to Insert/ Chart => All charts => Select "Line". ATC b) Use Excel functions to find the marginal product of labor (MPL) and enter it into the third column of the table. Note: MPL = change in Q/ change in L c) Graph MPL as a function of the number of workers Maria hires. MC TR Profit Profit per meal
Suppose that Maria is starting a food ordering and delivery company. Customers order meals online. Employees prepare the meals and deliver them to customers. Maintenance of the online platform for ordering meals costs the company $5 per day. The company also rents space where orders are prepared. Rent costs $50 per day. To make the deliveries, the business also rents two delivery cars that cost $10 each per day. The costs of ingredients for preparing different numbers of meals are provided in the table below. Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders. She will pay each employee $120 per day. The first two columns of the table below show how many meals different number of workers can prepare and deliver. $50 Price per meal Workers Meals (Labor L) (Output Q) 0 0 1 2 3 4 5 6 30 42 52 60 67 73 MPL FC Cost of ingredients $10 $75 $100 $121 $138 $152 $165 $177 $189 $199 $210 VC TC AFC AVC 7 79 8 85 9 90 10 95 a) Use Excel Charts to graph this business' production function (relationship between L and Q). Hint: Select the data that you would like to be included, and go to Insert/ Chart => All charts => Select "Line". ATC b) Use Excel functions to find the marginal product of labor (MPL) and enter it into the third column of the table. Note: MPL = change in Q/ change in L c) Graph MPL as a function of the number of workers Maria hires. MC TR Profit Profit per meal
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.3P
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