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Part A: Conceptual questions
Part B: Quantitative problems
The following table gives the total weekly output of bicycles at Al’s Bicycle Town.
Table 1
Labor Total Product (TP) Average Product of labor (AP) Marginal Product of labor (MP)
0 0 na na
1 100 100 100
2 300 —– ___
3 450 ___ ___
4 ___ ___ 110
5 630 ___ ___
6 ___ 110 ___
The cost of 1 worker is $2000 per month. Total fixed cost is $4000 per month.
Table 2
Labor Total Product (TP) Total variable cost (TVC) Total cost (TC)
0 0 na 4000
1 100 2000 ___
2 300 —– ___
3 450 ___ ___
4 ___ ___ 12000
5 630 ___ ___
6 ___ 12000 ___
Table 3
Total Product (TP) Average variable cost (AVC) Average total cost (ATC) Marginal cost (MC)
0 na na na
100 20 ___ 20
300 —– ___ ___
450 ___ ___ ___
___ ___ 21.43 ___
630 ___ ___ ___
___ ___ ___ 66.67
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