Group+1+Cost+Curves

=Group 1: Cost Curves=

Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. Please complete the following table and answer the questions below.

__JIMMY BOWENS__

**of ** **Workers ** || **Number ** **of ** **Machines ** || **Output ** **(corks produced ** **per hour) ** || **Marginal Product ** **of Labor ** || **Cost of Workers ** || **Cost of Machines ** || **Total Cost ** || **Marginal Cost ** ||
 * **Number **
 * 0 || 2 || 0 ||  || 0 || $20.00 || $20.00 ||   ||
 * ||  ||   || 5 ||   ||   ||   || $2.4 ||
 * <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">1 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">5 ||  || 12 || $20.00 || $32.00 ||   ||
 * ||  ||   || 5 ||   ||   ||   || $2.4 ||
 * <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">10 ||  || 24 || $20.00 || $44.00 ||   ||
 * ||  ||   || 10 ||   ||   ||   || $1.2 ||
 * <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">3 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">20 ||  || 36 || $20.00 || $56.00 ||   ||
 * ||  ||   || 15 ||   ||   ||   || $.8 ||
 * <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">4 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">35 ||  || 48 || $20.00 || $68.00 ||   ||
 * ||  ||   || 20 ||   ||   ||   || $.6 ||
 * <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">5 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">55 ||  || 60 || $20.00 || $80.00 ||   ||
 * ||  ||   || 15 ||   ||   ||   || $.8 ||
 * <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">6 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">70 ||  || 72 || $20.00 || $92.00 ||   ||
 * ||  ||   || 10 ||   ||   ||   || $1.2 ||
 * <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">7 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">2 || <span style="color: #000000; display: block; font-family: 'Times New Roman',serif; text-align: center;">80 ||  || 84 || $20.00 || $104.00 ||   ||

<span style="color: #000000; font-family: 'Times New Roman','serif';">A. Over what range of workers does labor exhibit diminishing marginal productivity?

__JIMMY BOWENS__

Based on the table, __Gallo's Cork Factory attains maximum productivity when it hires five workers__. With this amount of workers, __55 Corks are produced__, and the __Marginal Product Labor is 20__. Therefore, if Gallo's Cork Factor wants to maintain maximum productivity given its resources, it must hire no more than five workers. If it hires more than five workers, it will start seeing diminishing returns, that is the amount of products produced will continue to decrease.

<span style="font-family: 'Times New Roman',serif;">B. On a well-annotated graph, provide a rough sketch of the firm’s average variable costs (AVC), average fixed costs (AFC), average total costs (ATC), and marginal costs (MC).

__JIMMY BOWENS__

__AMER JUNTADO__



<span style="color: #000000; font-family: 'Times New Roman','serif';">C. If cork production is a competitive market and the market price of corks is $0.60, how many corks should the firm produce? How many workers’ should it hire? Illustrate on the graph the firms’ profits from cork production.