Total
Labor
Output
Marginal Variable
Product Cost
Fixed Cost Total Cost ATC
AVC
AFC
Marginal
Cost
0
0
2
10
4
25
6
35
8
43
10
50
12
55
14
58
16
60
Note: I have included an excel file with the table above. Feel free to fill in this table and either
submit the Excel file separately or paste a screen shot of the filled in table into your submission.
Question 1: What is the marginal product (MP) for each level of output? When does diminishing
returns set in?
Question 2: If labor costs $25 per worker per day, capital is $50 per day, and rent is $25, find
the variable cost, fixed cost, total cost, average total cost (ATC), average variable cost (AVC),
average fixed cost (AFC) and marginal cost for each level of output
Question 3: If the seller is a price taker and the price is $10, what is the optimal output for the
seller? Explain the sellers choice? What is the sellers profit at the optimal level of output?
Question 4: If the seller is a price taker and the price is $4, what is the optimal output for the
seller? Explain the sellers choice? What is the sellers profit at the optimal level of output?