Bernie’s ice-making company produces ice cubes using a 10-ton machine and electricity. The quantity of output, measured in terms of pounds of ice, is given in the accompanying table.

a. What is the fixed input? What is the variable input?

b. Construct a table showing the marginal product of the variable input. Does it show diminishing returns?

c. Suppose a 50% increase in the size of the fixed input increases output by 100% for any given amount of the variable input. What is the fixed input now? Construct a table showing the quantity of output and marginal product in this case.

Transcribed Image Text:

Quantity of electricity (kilowatts) Quantity of ice (pounds) 0 0 1 1,000 2 1,800 3 2,400 + 2,800