12. The first two columns in the following table give a firm's short-run production func-tion when the only variable input is labor, and capital (the fixed input) is held constantat 5 units. The price of capital is $2,000 per unit, and the price of labor is $500 per unit.CostAverage costUnits oflaborUnits of Average MarginaloutputMarginalcostproduct productFixedVariableTotalFixedVariableTotalXXXXXXXXXXXX204,0004010,0006015,0008019,40010023,000a. Complete the table.b. What is the relation between average variable cost and marginal cost? Between av-erage total cost and marginal cost?c. What is the relation between average product and average variable cost? Betweenmarginal product and marginal cost?

XX XX XX XX 20 4,000 40 10,000 60 15,000 80 19,400 100 23,000 a. Complete the table. b. What is the relation between average variable cost and marginal erage total cost and marginal cost? c. What is the relation between average product and average varia marginal product and marginal cost?

XX XX XX XX 20 4,000 40 10,000 60 15,000 80 19,400 100 23,000 a. Complete the table. b. What is the relation between average variable cost and marginal erage total cost and marginal cost? c. What is the relation between average product and average varia marginal product and marginal cost?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 3.7P

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Question

12. The first two columns in the following table give a firm's short-run production func-
tion when the only variable input is labor, and capital (the fixed input) is held constant
at 5 units. The price of capital is $2,000 per unit, and the price of labor is $500 per unit.
Cost
Average cost
Units of
labor
Units of Average Marginal
output
Marginal
cost
product product
Fixed
Variable
Total
Fixed
Variable
Total
XX
XX
XX
XX
XX
XX
20
4,000
40
10,000
60
15,000
80
19,400
100
23,000
a. Complete the table.
b. What is the relation between average variable cost and marginal cost? Between av-
erage total cost and marginal cost?
c. What is the relation between average product and average variable cost? Between
marginal product and marginal cost?

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