wage rate of $60. The average product of labor is 30, the last worker added 12 units to
total output, and total fixed cost is $3,600.
a. What is marginal cost?
b. What is average variable cost?
c. How much output is being produced?
d. What is average total cost?
e. Is average variable cost increasing, constant, or decreasing? What about average
total cost?
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
product Fixed Variable Total Fixed Variable
APPLIED
Average cost
Marginal
Total
cost
XX
XX
XX
XX
0.3
Units of
labor
Units of
output
Average Marginal
product
0
0
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?
13. Assume that labor-the only variable input of a firm-has the average and marginal
product curves shown in the following graph. Labor's wage is $2 per unit.
ducts
350
