# Use the information in the table below to answer the following questions2.Average TotalCostAverage FixedAverageQuantityMarginal CostCostVariable Cost\$ 20.00\$ 20.00\$ 18.00\$ 60.00\$ 39.00\$ 36.67S40.0020.00219.00\$S32.0013.3323.33\$ 30.00\$40.00\$ 50.00410.00\$ 46.00\$ 53.33\$ 60.00\$70.0058.0038.00\$ 90.00\$66.6746.67\$ 54.29S\$100.0075.71

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Question: Suppose the firm's only variable input is labor. Using the table, what level of output corresponds to where the firm's production fuction begins to rise at a diminishing rate? Also, at what level of output would the firm's average product of labor (APL) be maximized? Explain.

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Step 1

The information related to cost structure is provided in the table.

Step 2

There is an opposite relation between cost and product of a firm. When the MP is at highest, the MC is at lowest as shown in A of diagram. Similarly, when AP is highest and intersects the decreasing MP, AVC is the lowest and intersects the rising MC. It is shown as B in the diagram.

Step 3

The curves of MC and AVC can be drawn usi...

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