Compute the average product, variable cost also maximize profit.
1. The following table summarizes the short-run production function for your industry. Your product (Q) sells for $50 per unit, labour (L) costs $15 per unit also the rental price of capital (K) is $250 per unit. Lastly, Suppose capital also labour are used only in whole units, i.e. it is not possible to use 1.37 units of capital or labour, but instead 1,2, 3 etc. units are used. Complete the following table also then answer the accompanying problems.
2.
|
Q
|
K
|
L
|
APK
|
|
0*50
|
0*250
|
5*15
|
Q/K = 0
|
|
10*50
|
1*250
|
5
|
Q/K = 500/75 = 6.6
|
|
30*50
|
2*250
|
5
|
Q/K = 1500/500 = 3
|
|
60*50
|
3*250
|
5
|
Q/K = 3000/750 = 4
|
|
80*50
|
4*250
|
5
|
Q/K = 4000/1000 = 4
|
|
90*50
|
5*250
|
5
|
Q/K = 4500/1250 = 3.6
|
|
94*50
|
6*250
|
5
|
Q/K = 4700/1500 = 3.1
|
|
95*50
|
7*250
|
5
|
Q/K = 4750/1750 = 2.7
|
|
100*50
|
8*250
|
5
|
Q/K = 5000/2000 = 2.5
|
|
85*50
|
9*250
|
5
|
Q/K =4250/2250 = 1.8
|
|
75*50
|
10*250
|
5
|
Q/K = 3750/2500 = 1.5
|
|
50*50
|
11*250
|
5
|
Q/K = 2500/2750 = 0.9
|