Problem: Here is the Scenerio: Labor is only variable input. Output is 4000 unit Marginal Product of labor is 10 Average Product of labor is 50 Price of labor is $150 Marginal product of capital is 40 Average product of capital is 60 Price of capital is $240 Total Fixed Cost is $16000. Output is 4000. Have to find out MC, AVC, AFC, ATC and TOTAL ECONOMIC PROFIT.
Total full answer. The Second portion of the problem is- How should a Firm Adjust quantities of labor and Capital to maximize profit from producing 4000 unit of output? How do we decide the Adjustment? what can be said about the costs, if the adjustment in part a are complete?