Afirm's product sells for e2 per unit in a highly competitive market. The firm produces output using capital (which it r

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Afirm S Product Sells For E2 Per Unit In A Highly Competitive Market The Firm Produces Output Using Capital Which It R 1 (50.04 KiB) Viewed 58 times

Afirm's product sells for e2 per unit in a highly competitive market. The firm produces output using capital (which it rents at e75 per hour) and labor (which is paid a wage of e15 per hour ander a contract for 20 hours of labor services). Based on the information provided above answer the goestions that follow: CAPITAL LABOUR TOTAL TOTAL COST (TC) MARGINAL COST (MC) (K) (L) PRODUCT (Q) 20 0 20 50 20 150 3 20 300 20 400 5 20 450 6 20 475 20 475 20 450 20 400 10 20 300 11 20 150 a. Solve for total cost and marginal cost respectively (10 marks). b. Identify and explain the fixed and variable inputs (4 marks) c. Calculate the number of units of the variable input to be used to maximize profits (6 marks) d. Calculate and explain the range of the variable input usage where increasing marginal returns exist (5 marks). e. Calculate and explain the range of the variable input usage that decreasing marginal returns exist (5 marks)