Question 1. Nimbus, Inc., makes brooms and then sells them doorto-door. Here is the relationship
between the number of workers and Nimbus’s output in a given day:
Workers Output Marginal Product Total Cost Average Total Cost Marginal Cost
0 0
1 20
2 50
3 90
4 120
5 140
6 150
7 155
a) Fill in the column of marginal products. What pattern do you see? How might you explain it?
b) A worker costs $100 a day, and the firm has fixed costs of $200. Use this information to fill in the
column for total cost.
c) Fill in the column for average total cost. (Recall that ATC=TC/Q.) What pattern do you see?
d) Now fill in the column for marginal cost. (Recall that MC=ΔTC/ΔQ.) What pattern do you see?
e) Compare the column for marginal product and the column for marginal cost. Explain the
relationship.
f) Compare the column for average total cost and the column for marginal cost. Explain the
relationship.
Question 2. Based on market research, a film production company in Ectenia obtains the following
information about the demand and production costs of its new DVD:
Demand: P = 1,000 - 10Q
Total Revenue: TR = 1,000Q - 10Q2
Marginal Revenue: MR = 1,000 - 20Q
Marginal Cost: MC = 100 + 10Q
where Q indicates the number of copies sold and P is the price in Ectenian dollars.
a. Find the price and quantity