Q2. Yolanda runs a fish farm. When she employs 1 person, she produces 1,000 fish a week. When she hires a second worker, her total product doubles. Her total product doubles again when she hires a third worker. When she hires a fourth worker, her total product increases but by only 1,000 fish. Yolanda pays $1,000 a week for equipment and $500 a week to each worker she hires.
a) Construct Yolanda’s marginal and average product schedules. Over what range of workers does Yolanda’s experience increasing marginal returns?
The marginal product and average product schedules are in the table to the right. Marginal returns increase from workers 1 to 3. Diminishing returns set in after worker 3.
Labour Total product Average product Marginal product
0 0 – 1,000
1 1,000 1,000 1,000
2 2,000 1,000 2,000
3 4,000 1,333 1,000
4 5,000 1,250
b) Construct Yolanda’s total variable cost and total cost schedules. Calculate Yolanda’s total fixed cost.
Q2. Yolanda runs a fish farm. When she employs 1 person, she produces 1,000 fish a week. When she hires a second worker, her total product doubles. Her total product doubles again when she hires a third worker. When she hires a fourth worker, her total product increases but by only 1,000 fish. Yolanda pays $1,000 a week for equipment and $500 a week to each worker she hires.
a) Construct Yolanda’s marginal and average product schedules. Over what range of workers does Yolanda’s experience increasing marginal returns?
The marginal product and average product schedules are in the table to the right. Marginal returns increase from workers 1 to 3. Diminishing returns set in after worker 3.
Labour Total product Average product Marginal product
0 0 – 1,000
1 1,000 1,000 1,000
2 2,000 1,000 2,000
3 4,000 1,333 1,000
4 5,000 1,250
b) Construct Yolanda’s total variable cost and total cost schedules. Calculate Yolanda’s total fixed cost.
Q2. Yolanda runs a fish farm. When she employs 1 person, she produces 1,000 fish a week. When she hires a second worker, her total product doubles. Her total product doubles again when she hires a third worker. When she hires a fourth worker, her total product increases but by only 1,000 fish. Yolanda pays $1,000 a week for equipment and $500 a week to each worker she hires.
a) Construct Yolanda’s marginal and average product schedules. Over what range of workers does Yolanda’s experience increasing marginal returns?
The marginal product and average product schedules are in the table to the right. Marginal returns increase from workers 1 to 3. Diminishing returns set in after worker 3.
Labour Total product Average product Marginal product
0 0 – 1,000
1 1,000 1,000 1,000
2 2,000 1,000 2,000
3 4,000 1,333 1,000
4 5,000 1,250
b) Construct Yolanda’s total variable cost and total cost schedules. Calculate Yolanda’s total fixed cost.