Assignment No.
5.1
The following
production grid shows the relationship between capital and labor inputs and the
output that can be produced by a firm.
|
|
Capital |
|||||||||
|
Labor |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
|
0 |
0 |
1 |
3 |
6 |
8 |
10 |
12 |
13 |
13 |
|
|
1 |
1 |
10 |
30 |
60 |
85 |
105 |
120 |
130 |
135 |
|
|
2 |
3 |
30 |
85 |
105 |
120 |
150 |
180 |
210 |
230 |
|
|
3 |
6 |
60 |
105 |
130 |
210 |
280 |
340 |
380 |
410 |
|
|
4 |
8 |
85 |
120 |
210 |
410 |
500 |
570 |
620 |
660 |
|
|
5 |
10 |
105 |
150 |
280 |
500 |
700 |
850 |
950 |
1000 |
|
|
6 |
12 |
120 |
180 |
340 |
570 |
850 |
1100 |
1300 |
1400 |
|
|
7 |
13 |
130 |
210 |
380 |
620 |
950 |
1300 |
1500 |
1600 |
|
|
8 |
13 |
135 |
230 |
410 |
660 |
1000 |
1400 |
1600 |
1700 |
|
Based on
this information use Excel Charts to do the following:
(a) Set up an
isoquant map with isoquants representing output levels of 10, 105, and 410
units of output.
(b) Set up a
diagram showing the firm’s short run production function assuming that the firm
has only one unit of capital.
(c) Set up a diagram showing the firm’s
marginal product schedule assuming that the firm has only one unit of capital.
(d) Assume that capital is fixed at one unit
in the short run and that the costs associated with the use of fixed inputs are
$30 per period, while the wage rate is $10 per unit of labor per period. Use
this information to perform the calculations necessary to set up a diagram
showing total cost (TC) and total variable cost (TVC) of the firm per period in
the short run.
(e) Also, use the information in part c to
then set up a another diagram showing the firm’s short run marginal cost (MC),
average total cost (ATC), and average variable cost (AVC) in the range from 10
to 135 units of output.
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