2. (5 points) Production. Tom uses equipment that she rents for $1000 and ingredients that
cost $5.19 a serving for the first 5 servings; for additional servings, he has to pay more
because he has to find a new distributor and the ingredients cost $5.53. He hires workers
at $20 each and finds that they produce servings according to the following schedule:
Servings
Total Workers
1
0.30
2
0.65
3
1.04
4
1.50
5
2.02
6
2.63
7
3.32
8
4.12
9
5.04
10
6.09
a. (1 point) Calculate and graph the additional workers needed for each serving.
(Use a spreadsheet!) What is happening to the marginal productivity of labor as
more is produced and more workers are hired?
i. The more workers you hire the less productive they will become because
they may have to split tasks and divide responsibilities, so each worker
will have less work to do thus their productivity will decrease.
b. (2 points) Calculate and graph the marginal cost of each serving. (Use a
spreadsheet and show your calculations!) Why does the MC curve have the slope
(up, down, or flat) that it does? What happens to the slope of the MC curve as
Beyonce produces more and more servings? Why?
i.
