Question: A firm’s product sells for 2.00 per unit. Firm produces output using capital which

It rents at 75.00 per hour and labor which is paid a wage of 15.00 per hour under

a contract for 20 hours of labor services. Complete the following table and use that information to answer the questions

K L Q MPK APK APL VMPK

0 20 0

1 20 50

2 20 150

3 20 300

4 20 400

5 20 450

6 20 475

7 20 475

8 20 450

9 20 400

10 20 300

11 20 150

a) Identify fixed and variable costs

b) What are firms fixed costs

c) What is the variable cost of producing 475 units of output

d) How many units of the variable input should be used to maximize profits

e) What are the max profits this firm can earn

f) Over what range of the variable input usage do increasing marginal returns exist

g) Over what range of the variable input usage do decreasing marginal returns exist

h) Over what range of input usage do negative marginal returns exist.