Professional Documents
Culture Documents
1.Billy Bob’s revebue is $110,000. His accounting cost is $93,000, as indicated by the table.However ,
he has an opportunity cost too-the $15,000 he could have made teaching. His total (economic ) cost
is $ 108,000. Because his total revenue exceeds his total cos, he should stay in farming. He is earning
an economic profit of $2,000.
2.
a.See the following table. Marginal product of labor is ‘change in total product divided by change in
labor’. For worker 5 ,for instance,change in total product is (44-36) and the change in labor is
one.Average product of labor is ‘total product divided by number of workers’.For 5 workers, for
instance, total product is 44 and the number of workers is five
c.See the following diagram.(Note that marginal curves are drawn halfway between the quantity
values
18
16
14
12
10
MP
8
AP
6
4
2
0
1 2 3 4 5
4.
60
50
40
30
TC
20
10
0
1 2 3 4
c.The marginal cost of increasing production from 1 chair to 2 chairs is $13; from 2 3 it is $10;from 3
to 4 it is $15.