Problem set 8 Firms & Their Costs

At what worker does the law of diminishing returns take affect? (5 pts.) 8-6 Complete the following table: (3 pts. ca.) Workers Wage Total Product MPP Marginal Cost $34 0 X X 34 42 34 89 DULAWN- 34 120 34 111111 141 34 156 34 160 a. What is the relationship between marginal physical product and marginal cost? b. At what worker does the law of diminishing returns take affect? 8- 7 A firm has fixed costs of $60 and variable costs as indicated in the following table. Complete the table. (ea. row 3 pts.) Total Total Average Average Average Total fixed variable Total fixed variable total Marginal product cost cost cost cost cost cost cost 45 85 120 150 185 225 270 325 390 465 a. Graph the AFC, ATC, and MC with quantity of products on the horizontal axis and costs on the vertical axis. (10 pts.) b. Why does the AFC curve slope continuously downward? (2 pts.) c. Why does the MC curve eventually slope upward? (2 pts.) d. What is the relationship between ATC at its minimum and MC? (2 pts.)