Answers the question illustrated below:
Problem: It cost a company $50,000 to set up a chip manufacturing plant. The company pays $25 per hour for labor which is the variable input. A portion of the company's production schedule is:
Hours of Labor 1000
Number of Chips 200,000
Q1. Use the information in the above table to calculate the average product (AP) and marginal product (MP)
Q2. If 200,000 chips are produced, what is this company's total fixed cost (TFC), total variable cost (TVC), total cost (TC), average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) and marginal cost (MC)?
Q3. At the production level of 200,000 chips, is the company's average variable cost decreasing, at a minimum or increasing?