Short free-response question
Workers at a print shop
- Unit 3
- 5 points
- About 12 minutes
You can use a calculator on this question, just like on exam day.
A shorter question with a few lettered parts on one situation, often built on a table, a payoff matrix or a given or described graph. You make claims, explain them, calculate a value, or describe a labeled graph and show a change on it. On the exam: Questions 2 and 3 of 3 in Section II; 5 points each, a quarter of the section score each. About 12 minutes suggested for each. Four-function calculator allowed.
The question and its sources
A print shop sells posters in a perfectly competitive market. In the short run, its only variable input is labor. It pays each worker $50 per day, and its fixed cost is $100 per day. The table shows its daily output.
Table 1. Daily output of the print shop
| Number of workers | Total output (posters per day) |
|---|---|
| 0 | 0 |
| 1 | 10 |
| 2 | 25 |
| 3 | 35 |
| 4 | 40 |
| 5 | 42 |
Source: Hypothetical data
Suggested time: 12 minutes
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Part (a)
1 pointCalculate the marginal product of the third worker. Show your work.
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Part (b)
1 pointIdentify the worker with whom diminishing marginal returns begin. Explain using the data.
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Part (c)
1 pointCalculate the shop's average total cost when it hires 4 workers. Show your work.
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Part (d)
1 pointCalculate the marginal cost of a poster when the shop increases output from 25 posters to 35 posters by hiring the third worker. Show your work.
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Part (e)
1 pointExplain how diminishing marginal returns affect the shop's marginal cost as it hires more workers.
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