2. Inputs and outputs
Musashi's Performance Pizza is a small restaurant in Chicago that sells gluten-free pizzas. Musashi's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Musashi signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Musashi's kitchen cannot fit more than three ovens, Musashi cannot change the number of ovens he uses in his production of pizzas in the short run.
However, Musashi's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Musashi lets them know how many workers he needs for each day of the week. In the short run, these workers are inputs, and the ovens are inputs.
Musashi's daily production schedule is presented in the following table.
Fill in the blanks to complete the Marginal Product of Labor column for each worker.
|
Labor |
Output |
Marginal Product of Labor |
|---|---|---|
|
(Number of workers) |
(Pizzas) |
(Pizzas) |
| 0 | 0 | |
|
|
||
| 1 | 60 | |
|
|
||
| 2 | 100 | |
|
|
||
| 3 | 130 | |
|
|
||
| 4 | 150 | |
|
|
||
| 5 | 160 | |
On the following graph, plot Musashi's production function using the green points (triangle symbol).
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
Hint: Be sure to plot the first point at (0, 0).
Production Function012345200180160140120100806040200QUANTITY OF OUTPUT (Pizzas)LABOR (Number of workers)
Suppose that labor is Musashi's only variable cost and that he has a fixed cost of $20 per day and pays each of his workers $30 per day.
Use the orange points (square symbol) to plot Musashi's total cost curve on the following graph using the quantities from the preceding table.
Total Cost020406080100120140160180200200180160140120100806040200TOTAL COST (Dollars)QUANTITY OF OUTPUT (Pizzas)
True or False: The shape of the production function reflects the law of increasing marginal returns.
True
False