Question: Suppose the local newspaper hires students to fold and bag newspapers for delivery and pays them $20 per shift. Five students can fold and bag 300 newspapers per shift. The fourth student added 50 newspapers to total output. The capital cost is fixed at $50 per shift.

a) Is the newspaper operating in the long run or short run? Why?

b) What is the average product of 5 students?

c) Calculate the total fixed, total variable, and total costs of folding and bagging 300 newspapers.

d) Calculate the average fixed, average variable, and average total costs of folding and bagging 300 news-papers.

e) What is the marginal cost of one of the 50 newspapers folded and bagged by the fourth student?