A firm's product sells for $2 per unit in a highly competitive market. The firm produces output using capital (rents at $75 per hour) and labor (paid @ $15 per hour for 20 hours). Complete the following table and use that information to answer the problems that follow.
K L Q MPK APK APL VMPK
0 20 0
1 20 50
2 20 150
3 20 300
4 20 400
5 20 450
6 20 475
7 20 475
8 20 450
9 20 400
10 20 300
11 20 150
(a) Identify the fixed and variable inputs
(b) What are the firm's fixed costs?
(c) What is the variable cost of producing 475 units of output?
(d) How many units of the variable input should be used to maximize profits?
(e) What are the maximum profits this firm can earn?
(f) Over what range of the variable input usage do increasing marginal returns exist?
(g) Over what range of the variable input usage do decreasing marginal returns exist?
(h) Over what range of input usage do negative marginal returns exist?