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Asked Nov 15, 2019
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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.

Use the information in the table below to answer the following questions
2.
Average Total
Cost
Average Fixed
Average
Quantity
Marginal Cost
Cost
Variable Cost
$ 20.00
$ 20.00
$ 18.00
$ 60.00
$ 39.00
$ 36.67
S
40.00
20.00
2
19.00
$
S
32.00
13.33
23.33
$ 30.00
$
40.00
$ 50.00
4
10.00
$ 46.00
$ 53.33
$ 60.00
$
70.00
5
8.00
38.00
$ 90.00
$
6
6.67
46.67
$ 54.29
S
$100.00
7
5.71
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Use the information in the table below to answer the following questions 2. Average Total Cost Average Fixed Average Quantity Marginal Cost Cost Variable Cost $ 20.00 $ 20.00 $ 18.00 $ 60.00 $ 39.00 $ 36.67 S 40.00 20.00 2 19.00 $ S 32.00 13.33 23.33 $ 30.00 $ 40.00 $ 50.00 4 10.00 $ 46.00 $ 53.33 $ 60.00 $ 70.00 5 8.00 38.00 $ 90.00 $ 6 6.67 46.67 $ 54.29 S $100.00 7 5.71

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Expert Answer

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.

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АРМP АР МP Labor ,МC Costs AVC А в Output Graph-

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Step 3

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

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120 100 80 60 40 20 0 2 5 6 7 MC AVC Graph-2 LD Ln en

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