connect ECONOMICS PROBLEMS FOR CHAPTER 21 Name: 021-3 1. (a) Complete the following cost schedule: Average Average Rate of Total Marginal Average Variable Total Output Cost Cost Fixed Cost Cost Cost $ 600 800 1,050 OTAWNY 1,400 1,800 2,300 (b) Use the cost data to plot the ATC and MC curves on the accompanying graph. c) At what output rate is ATC minimized? (Use higher rate.) $1,000 900 800 700 600 COST (dollars per unit) 500 400 300 200 100 QUANTITY (units per period) 021-2 2. At what level of labor input in Figure 21.2 does marginal physical product (a) First diminish? (b) Become zero? (c) Turn negative? 021-4 3. Suppose a company incurs the following costs: labor, $500; equipment, $300; and materials, $200. The company owns the building, so it doesn't have to pay the usual $800 in rent. (a) What is the total accounting cost? (b) What is the total economic cost? (c) If the company sold the building and then leased it back, what would be the change in (i) Accounting costs? (ii) Economic costs? 021-2 4. Refer to the production table for jeans (Table 21.1). Suppose a firm has two sewing machines and can vary only the amount of labor input. (a) Graph the production function for jeans given the two sewing machines. ) Compute and graph the marginal physical product curve. (c) At what amount of labor input does the law of diminishing returns first become apparent in your graph of marginal physical product? d) Is total output still increasing when MPP begins to diminish? (e) When total output stops increasing, what is the value of MPP