Joe runs a farm. He rents the land for $100 a day, and he can hire workers for $20 per day for each worker. His short run production function is given in the first two columns of the following table.
workers output mp tvc tfc tc afc avc atc mc
0 0 ---- 0 ---------------------
1 10
2 25
3 45
4 60
5 70
6 74
a) ) Complete the table above.
b) Carefully graph AVC, ATC, and MC. Your graph should have cost (measured in dollars) on the vertical axis, and output on the horizontal axis.
c) With which worker does diminishing marginal returns set in?