Dmitri's Performance Pizza is a small restaurant in Chicago that sells gluten-free pizzas. Dmitri's very tiny kitchen has barely enough room for the two ovens in which his workers bake the pizzas. Dmitri signed a lease obligating him to pay the rent for the two ovens for the next year. Because of this, and because Dmitri's kitchen cannot fit more than two ovens, Dmitri cannot change the number of ovens he uses in his production of pizzas in the short run.

However, Dmitri's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Dmitri lets them know how many workers he needs for each day of the week. In the short run, these workers are (variable/fixed) inputs, and the ovens are (fixed/variable) inputs.

Dmitri's daily production schedule is presented in the following table.

Suppose that labor is Dmitri's only variable cost and that he has a fixed cost of $50 per day and pays each of his workers $40 per day.

Use the orange points (square symbol) to plot Dmitri's total cost curve on the following graph using the quantities from the preceding table.

The law of diminishing marginal product of labor is demonstrated by which of the following?

Total output declines as you increase the quantity of labor.

Total output increases at a decreasing rate as you increase the quantity of labor.

Total output increases only when you increase both labor and ovens.

Transcribed Image Text:

Fill in the blanks to complete the Marginal Product of Labor column for each worker. Output Marginal Product of Labor (Pizzas) (Pizzas) Number of Workers 0 1 2 3 4 5 0 100 180 240 280 300 AAA On the following graph, plot Dmitri s production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0). QUANTITY OF OUTPUT (Pizzas) 300 270 240 210 180 150 120 90 60 30 0 0 2 3 LABOR HIRED (Number of workers) 1 4 5 Production Function (?) TOTAL COST (Dollars) 300 270 240 210 180 150 120 90 60 30 0 0 30 60 90 120 150 180 210 240 270 QUANTITY OF OUTPUT (Pizzas) 300 Total Cost (?) Fill in the blanks to complete the Marginal Product of Labor column for each worker. Output Marginal Product of Labor (Pizzas) (Pizzas) Number of Workers 0 1 2 3 4 5 0 100 180 240 280 300 AAA On the following graph, plot Dmitri s production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0). QUANTITY OF OUTPUT (Pizzas) 300 270 240 210 180 150 120 90 60 30 0 0 2 3 LABOR HIRED (Number of workers) 1 4 5 Production Function (?) TOTAL COST (Dollars) 300 270 240 210 180 150 120 90 60 30 0 0 30 60 90 120 150 180 210 240 270 QUANTITY OF OUTPUT (Pizzas) 300 Total Cost (?)

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