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Slides By Timothy Diette and Kevin Brady Production and Costs Begin Interactive Examples To navigate, please click the appropriate green buttons. (Do not use the arrows on your keyboard) Material from this presentation can be found in: Chapter 7 CoreEconomics, 2e

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Answer QUESTION: You are the manager of a firm. Your labor, output, and total cost are shown in the table to the right. 1. Fill in the marginal product for each worker. 2. Fill in the average product for each worker. 3. Fill in the average total cost for each output level. 4. Fill in the marginal cost for each output level. Production and Costs LQMPAPTCATC 00--- 100--- 1120150 2300180 3500240 4670360 5800540 Interactive Examples MC ---

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Answer ANSWER: 1. Fill in the marginal product for each worker. The marginal product is the change in output from employing an additional worker. For example, the marginal product of the third worker is: 500 – 300 = 200 Production and Costs LQMPAPTCATC 00--- 100--- 1120 150 2300180 3500200240 4670170360 5800130540 Interactive Examples MC ---

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Answer ANSWER: 2. Fill in the average product for each worker. The average product is found by dividing total output by the number of workers employed to produce that output. For example, the average product of two workers is: 300/2 = 150 Production and Costs LQMPAPTCATC 00--- 100--- 1120 150 2300180150180 3500200166.67240 4670170167.5360 5800130160540 Interactive Examples MC ---

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Answer ANSWER: 3. Fill in the average total cost for each output level. The average total cost is found by dividing total cost by the total output. For example, the average total cost when 3 workers are employed is: 240/500 = $.48 Production and Costs LQMPAPTCATC 00--- 100--- 1120 1501.25 2300180150180.60 3500200166.67240.48 4670170167.5360.5373 5800130160540.675 Interactive Examples MC ---

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ANSWER: 4. Fill in the marginal cost for each output level. The marginal cost is found by dividing the change in total cost by the change in total output. For example, the marginal cost when 4 workers are employed is: (360-240) / (670-500) = $.7058 Production and Costs LQMPAPTCATC 00--- 100--- 1120 1501.25 2300180150180.60 3500200166.67240.48 4670170167.50360.54 5800130160540.68 Interactive Examples The End 1.38 MC ---.42.17.30.71

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